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U.S food prices see largest 12-month increase since 1980s

PeopleImages/iStock/Getty Images woman grocery shopping while on mobile phone
Consumer Price Index showed food prices in February up 8.6% year over year.

Grocery store food prices are rising, but at an accelerated rate, USDA said this week following the release of the latest Consumer Price Index (CPI). Food prices were 1.4% higher in February but 8.6% higher than February 2021, the largest 12-month increase since the period ending April 1981.

“These are very large changes when you think of the 20-year historical average for an annual change in food prices is about 2.5%,” said Matt MacLachlan, economist at USDA.

While meat prices have been seeing substantial hikes, almost every food category saw a price increase in February, he said. When this happens, “it’s a fairly safe bet to think that it has to do with input prices that affect all of the food categories.”

Energy prices, cost of labor and transportation costs are all high right now.

The index for meats, poultry, fish, and eggs increased 13% over the last year. Beef prices alone increased substantially, up 16.2% year over year in February. Dairy and related products prices rose 5.2% year over year. Pork rose by 14%, poultry by 12.5%, fish and seafood by 10.4% and eggs by 11.4%.

The index for food away from home rose 6.8% over the last year, the largest 12-month increase since December 1981. The index for limited service meals rose 8.0% over the last 12 months, and the index for full service meals rose 7.5%.

How the current Ukraine situation will affect food prices is still unknown since the Russia invasion began at the end of February, MacLachlan said.

FAO Food Price Index registers all-time high

The United Nations Food and Agriculture Organization’s Food Price Index (FFPI) averaged 140.7 points in February 2022, up 5.3 points (3.9%) from January and as much as 24.1 points (20.7%) above its level a year ago. This, FAO said, represents a new all-time high, exceeding the previous top of February 2011 by 3.1 points.

The February rise was led by large increases in vegetable oil and dairy price sub-indices, FAO said, adding that cereals and meat prices were also up.

The FAO Dairy Price Index averaged 141.1 points in February, up 8.5 points (6.4%) from January, marking the sixth successive monthly increase and placing the index 28.0 points (24.8%) above its value in the corresponding month last year. In February, international quotations for all dairy products represented in the index firmed, underpinned by the continued tightening of global markets on the back of lower-than-expected milk supplies in Western Europe and Oceania.

“Besides tight global supplies, persistent import demand, especially from North Asia and the Middle East, led to steep increases in whole milk powder and cheese price quotations,” the FAO noted. “International skim milk powder prices rose significantly as well, reflecting a lower volume of milk deliveries for drying plants in Western Europe, while butter prices received a boost from high demand for spot supplies.”

The FAO Meat Price Index averaged 112.8 points in February, up 1.2 points (1.1%) month-on-month and 15.0 points (15.3%) from its level a year ago.

In February, international bovine meat prices reached a new record high, driven by strong global import demand amidst tight supplies of slaughter-ready cattle in Brazil and high demand for herd rebuilding in Australia.

FAO reported that pork prices also edged up, reflecting increased internal demand and scaled-back hog supplies in the European Union and the U.S.

Poultry meat prices, however, fell slightly due to reduced imports by China following the end of the Spring Festival and lower domestic demand in Brazil.

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