The U.S. Food and Food Market Sliding Decline Revisited: The First Year in a Multi-Family Market
In March, the Bureau of Labor Statistics reported that groceries dropped for the first time in more than a year.
Fruits and vegetable prices fell 1.3%, and dairy products ticked down 0.1%. The other indexes, for non-alcoholic beverages, cereals and bakery products and all other groceries, went up.
Over the course of the year, a number of grocery items notched large price increases. Eggs went up 36%, margarine went up 33.4%, flour went 17.5% pricier, potatoes went up 9.7%, and cheese went up 8.2%.
Some prices cooled over the course of the year: Bacon fell 5.5%, uncooked beef roasts got 4.4% cheaper, and uncooked ground beef prices dipped 1.4% — though meat is still relatively expensive given how much prices soared in 2021. Fresh fruits dropped 1.5%.
International events like the war in Ukraine and fuel prices can affect food prices. This has provided cover for food companies to raise prices.
Consumers in the US have been dealing with high inflation for months, and have recently been moving to low-cost retailers and selling items that are cheaper.
It’s a huge shift: The most expensive tier of products went from 24.5% of the market in January 2019 to 9% in March in online grocery, according to research from Adobe Analytics that was previously shared with CNN. The lowest tier of online groceries grew in market share to nearly half of the market.
Egg production was down from February to March, adjusted for seasonal swings. Egg prices went up in the previous months mainly due to avian flu and companies taking advantage of the disruption to pad profits. Egg prices have come down recently.
US inflation at the wholesale level continued its downward slide in March with annualized price increases sinking dramatically to 2.7% from an upwardly revised 4.9%, according to the Producer Price Index released Thursday by the Bureau of Labor Statistics.
On a monthly basis, producer prices slumped by 0.5%, driven by falling goods prices, specifically lower energy prices. Fresh and dry vegetables prices fell, as did services and the price index for categories such as light motor trucks and chicken eggs and meats moved higher.
Producer Price Inflation and the Rate of Unemployment in the U.S. During the March Breakout of the Post-Pandemic Epoch
Economists were expecting annual inflation, as measured by the PPI, to land at 3% for the 12 months ended in March and for no change from the month before.
Chris Rupkey, chief economist at FwdBonds, told CNN that it looks like inflation is coming off the boil. If I had to guess, I would think that it will lead to lower prices on store shelves in the coming months due to the slowing producer goods.
For the 12 months ended in March, core producer price inflation fell by 4.7% from an upwardly revised 4.8%, but was still up 3.0% from a year earlier.
PPI is one of several closely watched inflation gauges. Because the producer-centric index captures price shifts upstream of the consumer, it’s sometimes looked to as a potential leading indicator of how prices may eventually land at the store level.
Since notching a 11.1% gain on June 23, 2022, the PPI has become more and more difficult to measure as supply chains have regained their pre- Pandemic equilibrium, as the economy continues to recover.
The week ended April 8 saw the highest levels of initial weekly claims in more than a year. Continuing claims, which are filed by people who have received unemployment benefits for more than one week, dropped to 1.81 million for the week ended April 1, from 1.82 million the week before.
Weekly claims can be volatile and are often subject to revision. Last week, the Labor Department made a series of significant adjustments to recent years’ data to better account for pandemic-era dynamics.
Unemployment is an indicator of a recession and it became more likely after the banking crisis, according to the minutes from the central bank’s March policy meeting.
“When the labor market becomes unglued, it is like a runaway train: The layoffs start, and no one can stop it. It’s too late, and the Fed’s policy tightening has done too much,” he said.
“So right now, we’re not quite there. … If initial claims fall back under 200,000, where they were for a couple of weeks at the start of the year, then OK, the recession is off. But if it climbs further — 250,000, 260,000 — I would be worried,” he said.