Food inflation getting tighter grip on consumers

Two big grocery chains in the southeastern US are limiting the number of Thanksgiving staples customers can buy, the Wall Street Journal reports, in a reminder to consumers that supply-chain snarls are still roiling retailers as the holiday season unfolds. Publix Super Markets limited its customers to no more than two individual items from a menu of Thanksgiving ingredients. Winn-Dixie restricted shoppers to one turkey apiece while encouraging customers to “only purchase what they need.” That’s a contrast with a holiday typically marked by abundance, and it suggests there are still strains in food supply chains farms to processing plants. For supermarkets, the holiday is the first big test of the season of their ability to fill shelves and staff stores.

USDA still projects 2022 food price increases abating from 2021 marks; overall food price inflation, grocery store price increases in 2022 seen back near 20-year average. Inflationary pressures for food are set to post a second straight year of increases in overall food prices, restaurant and grocery prices that are above the 20-year average, according to the latest update from USDA’s Economic Research Service (ERS). ERS expects overall food price inflation at 3.0% to 4.0% in 2021, with grocery store prices (food at home) up 2.5% to 3.5% and restaurant (food away from home) prices up 4.0% to 5.0%. Restaurant prices are on the only overall category to be revised higher this month, previously having been forecast to increase by 3.5% to 4.5%. But the increases for 2021 are coming after similar boosts in 2020 — overall food prices rose 3.4%, restaurant prices rose 3.4% and grocery store prices rose 3.5%. All of those levels are above the 20-year averages of 2.4% for all food prices, 2.8% for restaurant prices and 2.0% for grocery store prices. If the current forecast levels hold, 2021 overall food price inflation and grocery price increases are the highest since 2020 while restaurant prices will have risen the most since 1990 when they rose 4.7%.

USDA increased its forecast levels at the grocery store for several products, including meat, poultry and fish; meats; beef/veal; and pork. Plus, increases for fats and oils and fresh vegetables are also now seen rising even more than the month-ago outlooks. USDA noted that the level of food price inflation “varies depending on whether the food was purchased for consumption away from home or at home.” They detailed that restaurant prices were up 0.8% in October 2021 and 5.3% higher than October 2020. Grocery store prices rose 1.1% from September to October and the October 2021 levels are 5.4% higher than October 2020.

So far this year, grocery store prices are up 2.8% from the same period in 2020, with restaurant prices up 3.9% and overall food prices registering an increase of 3.3%. “All food categories tracked by ERS increased in price from September to October,” the agency said.

Increases in meat prices in 2021 mark two years of sizable increases. The increased outlook for several food categories in 2021 versus the month-ago forecasts mean several categories will have seen back-to-back years that have increased more than the 20-year average. Meat, poultry and fish prices are expected to rise 5.0% to 6.0% after rising 6.3% in 2020. For meats, the forecast increase of 6.0% to 7.0% comes after an increase of 7.4% in 2020, while beef prices are seen rising 7.5% to 8.5% compared with the 9.6% increase for 2020. Pork prices are expected to increase 7.0% to 8.0% in 2021 after rising 6.3% in 2020.

USDA’s October 2021 Cold Storage Report highlights

Cheese: Total natural cheese stocks in refrigerated warehouses on October 31, 2021 were down slightly from the previous month but up 8 percent from October 31, 2020. Butter stocks were down 13 percent from last month and down 6 percent from a year ago.

Poultry: Total frozen poultry supplies on October 31, 2021 were down 8 percent from the previous month and down 18 percent from a year ago. Total stocks of chicken were up 3 percent from the previous month but down 17 percent from last year. Total pounds of turkey in freezers were down 27 percent from last month and down 19 percent from October 31, 2020.

Beef & Pork: Total red meat supplies in freezers were up 1 percent from the previous month but down 3 percent from last year. Total pounds of beef in freezers were up 9 percent from the previous month but down 5 percent from last year. Frozen pork supplies were down 6 percent from the previous month and down 2 percent from last year. Stocks of pork bellies were down 10 percent from last month and down 39 percent from last year.

USDA’s Romania African swine fever update

The number of active African Swine Fever (ASF) outbreaks in Romania continues to remain high. At the end of October 2021, there was a 43 percent surge in the number of outbreaks from the same time in 2020. Commercial farms continue to be impacted directly when the virus is confirmed at the farm level, or indirectly by restrictions imposed on animal movement. The draft ASF surveillance and control action plan is still pending the Romanian government’s approval.

October 2021 US milk production (NASS)

Milk production in the 24 major milk-producing states totaled 17.7 billion pounds, down 0.3 percent from October 2020. September revised production, at 17.3 billion pounds, was up 0.2 percent from September 2020. The September revision represented a decrease of 37 million pounds or 0.2 percent from last month's preliminary production estimate. Production per cow in the 24 major states averaged 1,990 pounds for October, 6 pounds below October 2020. The number of milk cows on farms in the 24 major states was 8.90 million head, 4,000 head more than October 2020, but 15,000 head less than September 2021.