Beyond such widely acknowledged factors as labor shortages, higher fuel costs and supply-chain disruptions from the pandemic, other factors helping to drive up the price of food have surfaced in recent weeks, The Washington Post reported.
The war in Ukraine is having a large effect on U.S. food prices, the newspaper relayed. For one, corn used for animal feed and ethanol is nearing 10-year highs. That’s partly due to a Biden administration decision to allow summer sales of high-ethanol gas to ease the rise in fuel prices since Russia’s invasion. But as feed accounts for 60% of the costs of raising livestock, expect prices to climb for beef, pork and poultry.
Escalating fertilizer prices tied to Russia’s war in Ukraine could also be a factor for meat in that slaughter houses often use fertilizer for carbon dioxide use to stun animals, the Post reported.
Lesser known to average Americans than to those in the meat industry, the worst outbreak of avian flu in the U.S. since 2015 has prompted a surge in chicken, turkey and egg prices, the newspaper noted.
California’s ongoing drought and the decision by Texas to increase inspections of commercial vehicles crossing the border are other lesser known factors in rising food costs, the Post added.
People should expect food inflation to continue this year and in 2023, BofA Securities analyst Alexander Lin wrote in a note to investors.
But Lin, for one, thinks Russia’s invasion of Ukraine has not yet hit prices at U.S. grocery stores, but rather will “lead to sustained price increases later this year.”
Americans are eating more than in the past, and companies are now comfortable with passing along the costs, according to the analyst, who expects food inflation to “stay hot this year at around 9% [for the 12 months ending in the fourth quarter] and rise another 4% in 2023.”
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