Posts Tagged “inflation”
During the past four years inflation has battered consumers, and a Rabobank analysis says U.S. consumers have finally hit the wall.
In a report on the cost of a Fourth of July barbecue, Rabobank analysts said consumers are trading down and eating out less often in response to long-running inflation.
“The consumer is waving the white flag on food inflation,” Tom Bailey, senior consumer foods analyst at Rabobank, said in a news release. “With an added 2% in price hikes in 2024 coupled with the cost disparity between dining out and cooking at home at its widest margin in history, we’re seeing heightened fatigue and frugality.”
The 2024 Rabobank BBQ Index, which measures the cost of staple ingredients for a 10-person barbecue, shows that it will cost $99 to host a cookout on the Fourth of July this year, up from $97 last year and $73 in 2018. Cookout ingredients are 32% higher food costs in 2024 compared with 2019, according to Rabobank.
The index showed that the average U.S. consumer has to work an hour to earn enough money for a six-pack of beer and a burger in 2024, up from 51 minutes in 2019, and they’ll have to work nine hours to pay for a barbecue this year, up 32% since 2019.
Produce prices for the BBQ Index are mostly tame compared with a year ago, Rabobank economists said. California’s drought in 2023 sent lettuce prices to more than $100 a carton, well above the average range of $15 to $20 per carton. Rabobank analysts said lettuce prices have come down significantly in 2024.
“We expect leafy greens to have steady supplies, good quality and decent prices,” Rabobank economists said in the release.
Potatoes, also hit hard by drought last year, have rebounded with greater supply based on expanded acreage harvested in the fall of 2023. Potato prices are about half of year-ago levels, the index showed.
On the other side of the ledger, Rabobank analysts said tomato prices have moved higher in 2024 as dry weather in Mexico has curtailed production and overall availability.
Rabobank analysts said a reported 68% of people polled by Vericast say they are switching from restaurants — where the tab is up 4.4% annually — to grocery stores, which have seen only a 1.1% price.
Consumers are pulling back all purchases because of tight budgets, Rabobank officials said. Retail sales were weaker than expected in May as higher borrowing rates and inflation discouraged purchase decisions, Rabobank economists said.
“Retail sales will likely remain soft throughout 2024,” Bailey said.
Wages have not kept up with inflation. Credit card debt, on average, sits at $10,479 per household in the U.S., up from $8,763 in 2021. Forty-one percent of Americans polled by WalletHub say they have more credit card debt now than they did 12 months ago, the release said.
Government aid, such as Supplemental Nutrition Assistance Program emergency payments, the child tax credit, increased unemployment benefits and a suspension of student loan payments have ended, the release said. People under the age of 35 have been hit the hardest; credit card delinquencies in this demographic are at their highest level since 2011, according to the Federal Reserve.
“Fiscal fitness is now more of a focus,” Bailey said. “Saddled with mounting credit card debt, waning savings, and lower real income, consumers are spending less.”
Avocado prices have fallen sharply over the past month due to an oversupply of Peruvian avocado. The decline is spurred by fears of recession impacting the consumption of relatively expensive food products, according to agriculture commodities data group Tridge.
Tridge data reveals wholesale prices of avocado in Mexico dropped by 47% month-on-month, and avocado prices in the U.S. also fell by 27% month-on-month.
Colombian avocado prices also fell by 39% month-on-month.
“The price downturn is due mainly to oversupply,” Tridge reported.
“Peru has been increasing avocado export by 25% every year for almost five years, and this year, its export volume has increased by 30%.”
There is an “avocado disaster” in Europe because of oversupplies, and U.S. and Asian markets are starting to exhibit similar market reactions.
Additionally, some avocado market participants observe consumption of avocados is falling because people are buying fewer avocados while high inflation and recession affect household income. In some countries, avocados are sold lower than the farmgate price, Tridge reported.
Retail food price increases are expected to remain low at supermarkets and food stores for 2020, according to the latest USDA’s Economic Research Service Food Price report. Inflation is expected to be in a range from 0.5 to 1.5 percent.
That, the agency said, would make 2019 the fourth straight year of deflating or lower-than-average food inflation at retail. Over the past 20 years, retail food inflation has averaged about 2 percent per year.
Commodities with lower prices this year, range from poultry, to eggs, fats and oils, and fresh fruits. On the other hand, fresh vegetables in 2019 are projected to increase at inflation rates greater than the 20-historical average.
For the year 2021, USDA economists predict low retail food inflation will continue.
“In 2020, food-at-home prices are expected to increase in a range between 0.5 percent and 1.5 percent, as potentially the fifth year in a row with deflating or lower-than-average inflating retail food prices,” the agency said.
Retail fresh fruit inflation is forecast at -1.5 to -0.5 percent in 2019 and 1 to 2 percent in 2020. Retail fresh vegetable prices are pegged to jump 3 to 4 percent in 2019, but change just zero to 1 percent in 2020.
Restaurant food prices have increased at a faster rate than supermarket food in recent years; the USDA projects food-away-from-home inflation at 2 to 3 percent for both 2019 and 2020.
Price inflation has slowed to a crawl in 2015 for retail fresh produce.
Little or no inflation this year is expected for retail fresh fruit prices, while the top end of retail fresh vegetable price inflation is just 1.5%.
The USDA’s Economic Research Service reported in late July that the agency’s updated forecast for retail price inflation for fruit is now in a range 0% to 1% for 2015, rising to 2.5% to 3.5% next year. For fresh vegetables, the USDA predicts retail prices will increase from 0.5% to 1.5% and rising 2% to 3% next year.
Retail price inflation for fresh fruits in 2014 was 4.8%, while fresh vegetable retail prices were off 1.3% compared with 2013. The 20-year average inflation rate for retail fresh fruits is 3% and 3.2% for vegetables.
Fresh produce prices will increase at a lower rate than the overall food price index. The agency predicts overall supermarket food prices will increase 1.75% to 2.75% this year, with higher inflation for beef and eggs. In 2016, the USDA predicts retail food prices will increase from 2% to 3%, in line with the 20-year average of 2.6%.
Though the California drought has not caused fresh produce inflation this year, the USDA said it could play a role in food prices next year.
“The ongoing drought in California could have large and lasting effects on fruit, vegetable, dairy, and egg prices,” the USDA said in the forecast. On the other hand, the agency said lower trending oil prices could cause lower production and transportation costs to be passed on to consumers.
The USDA said farm-level prices for growers are down compared with a year ago. The agency predicts farm level prices for vegetables will decline 4% to 5% this year, while farm-level fruit prices will sink between 5% and 6%. For 2016, the USDA predicts grower prices for fresh fruits will rise 1.5% to 2.5%, while grower prices for fresh vegetables will increase 1% to 2%.
Fresh produce prices will increase 3.5% to 4.5% due to inflation this year, according to the latest USDA retail price forecast.
That compares to 2% price drop in 2012 for all fresh produce.
The Economic Research Service, a part of the USDA, report retail fresh fruit prices for 2013 are predicted to rise 3% to 4% in 2013, after 1% inflation in 2012 and 3.3% higher prices in 2011. With fresh fruit prices decreasing .5% in April, the USDA reported the fresh fruit index is up 1.4% from the same time a year ago.
The Department of Commerce in April reported the average retail price per pound of red delicious apples was $1.33 per pound, up seven cents per pound from April 2012. Retail navel orange prices were 98 cents per pound in April, up from 91 cents per pound the same time a year ago. Retail banana prices, at 60 cents per pound in April, were unchanged from a year ago.
Fresh vegetable retail prices are predicted to rise from 4% to 5% in 2013, after a 5.1% decline in retail prices in 2012 and a 5.6% gain in 2011.
The fresh vegetable index dropped 2.7% in April, but prices were still up 4.6% compared with the same time in 2012. The average retail price of tomatoes in April was $1.46 per pound, up from $1.39 per pound in April 2012.
The consumer price of all food consumed at home in 2013 is forecast to climb 2.5% to 3.5%, the same forecast range as food consumed away from home.
Fresh fruit and vegetable retail prices in 2012 were generally lower, according to a recently released government report.
The U.S. Department of Agriculture’s Economic Research Service reports lower fruit and vegetable prices resulting in overall retail prices for food being kept in line through October this year.
From January through October , average food-at-home prices have been flat because deflation in the fresh fruit and vegetable arena and lower prices for milk and pork, the USDA ERS said in a food price outlook report issued in late November. By contrast, beef, veal, poultry, fat and oil prices have been higher.
The inflation forecast for both all food and food-at-home prices in 2012 is 2.5 to 3.5 percent. Lower prices were particularly pronounced for vegetables in 2012, according to the USDA ERS.
The fresh vegetable consumer price index increased 0.6 percent, however it has dropped about every month in 2012. Compared with 2011 year ago, fresh vegetable prices are down 3.2 percent on average, due primarily by a 10.9 percent drop in potato prices, a 4.1 oercent decline in lettuce and a 1.7 percent slide in tomato prices. Other fresh vegetable prices were down 0.7 percent.
Warmer weather and favorable growing conditions in 2012 combined to increase yield and lower prices compared with year-ago levels.
An expected seasonal increase in prices during the second half of 2012 has been less than predicted, and because of that the USDA now expects fresh vegetable prices to fall 4 percent to 5 percent in 2012. The fresh fruit price index is up 2.1 percent from October 2011, and the USDA projected fresh fruit prices for 2012 are now projected to fall between 1 percent and 2 percent.
Compared with October 2011, the USDA said retail apple prices are up 6.4 percent, with banana prices 1.4 percent lower, citrus prices 0.1 percent higher and other fresh fruit commodities up 1.3 percent in retail price.
Prices increases overall of 3 to 4 percent for fresh produce is projected in 2013 by the USDA. The agency sees an increase of 3 to to 4 percent for fresh fruit and 4 to 5 percent for fresh vegetables.
Overall food price inflation for 2013 is projected between 3 and 4 percent. Prices for food served away from home are projected to increase 2.5 to 3.5 percent in 2013, while prices for food served at home are expected to increase 3 to 4 percent.