Financial Times writer Colby Smith reported on Wednesday that, “The rapid pace of US consumer price increases steadied at a 13-year high in July while month-on-month gains moderated slightly, as inflationary pressures persisted because of supply-chain constraints and soaring demand.
“The consumer price index [CPI] published by the Bureau of Labor Statistics rose 5.4 per cent in July from a year ago, surpassing the 5.3 per cent expected by economists. That is in line with the 5.4 per cent increase reported in June, which was the largest such surge since 2008.”
The FT article noted that, “Whether the recent increase in consumer prices will turn into more persistent inflation is a point of debate. The Federal Reserve has broadly taken the view that rising costs will abate over time as pandemic-related shortages and supply-chain constraints ease. But Jay Powell, the central bank’s chair, recently acknowledged that inflation risks were tilted ‘to the upside’ in the near term.”
The cost of many grocery items — including meats, poultry, eggs and dairy — also ticked higher again in July, according to the [CPI] report.
“Groceries have been trending higher for well over a year, with the Bureau of Labor Statistics showing a 2.6 percent rise in the ‘food at home’ category compared with last year.”
The Post article stated that, “Tyson Foods, one of the nation’s largest meat producers, has hiked prices for its restaurant customers amid strongdemand, as rising grain, freight, packaging and labor prices dragged on its bottom line, chief executive Donnie King told reporters Monday on the company’s earnings call.
“Tyson’s retail orders have risen 30 percent compared with pre-covid levels, King said, but the company has dealt with turnover and struggled to fill open positions. Meanwhile, ‘we have seen accelerating and unprecedented inflation,’ King said. ‘So what do you do about that?‘
“Last quarter, Tyson increased its average price for pork nearly 40 percent. It raised chicken prices more than 15 percent and beef prices nearly 12 percent. This week, it lifted its full-year revenue forecast due to the strong demand for its products. ‘Costs are hitting us faster than we can get pricing at this point,’ he told reporters.”
Wednesday’s CPI report stated that, “The food at home index increased 2.6 percent over the past 12 months. All six major grocery store food group indexes rose over the span, with increases ranging from 1.1 percent (nonalcoholic beverages) to 5.9 percent (meats, poultry, fish, and eggs).”
“The index for fruits and vegetables was the only major grocery store food group index to fall in July, declining 0.9 percent after rising 0.7 percent in June. The index for fresh fruits fell 1.8 percent over the month,” the report said.
The report added that, “The food away from home index rose 0.8 percent in July, its largest monthly increase since February 1981.”
Keith Good is the social media manager for the farmdoc project at the University of Illinois. He has previously worked for the USDA’s National Agricultural Statistics Service, and compiled the daily FarmPolicy.com News Summary from 2003-2015. He is a graduate of Purdue University (M.S.- Agricultural Economics), and Southern Illinois University School of Law.
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