The Rapid Rise of Food Costs

The Rapid Rise of Food Costs

A few weeks ago, the US Department of Agriculture put out a Food Price Outlook for 2022. If you’ve been following the news lately, you’re well aware of the impacts the pandemic, supply chain, and war in Ukraine are having on our global economy. It’s increasingly difficult for consumers and small business owners to keep up with rising costs, shrinking supply, and lack of workers. Now, food prices are on the rise—and fast. The quickest rise in 4 decades, in fact. Over the course of just one year (2021 – 2022), food prices rose nearly 8 percent—the biggest one-year jump since the early 80s. Here, we’ll dive into some additional details on food inflation, which doesn’t seem to be easing up any time soon.

Food-at-Home and Food-Away-From-Home

There are two distinct areas the Food Price Outlook investigated: food-at-home prices and food-away-from-home prices. Food-at-home includes grocery stores or other establishments in which consumers can purchase goods. Food-away-from-home is obviously restaurants. For over three decades, from the 70s to the early 2000s, prices in both of these areas increased at comparable rates. It was 2009 that things started to split. Food-at-home prices went down in 2016, while food-away-from-home steadily increased. Why? Simply put, serving food at restaurants costs more.

Getting Specific

The year 2020 saw things equalize a bit. At-home and away-from-home prices increased 3.5 and 3.4 percent, respectively. The highest increase to food was in the meat industry, where beef/veal shot up almost 10 percent, pork by 6.3 percent, and poultry 5.6 percent. At the same time, fruits decreased by just 0.8 percent.

Cut to 2021 and we see at-home prices go up 3.5 percent and away-from-home increase 4.5 percent. Once again, beef and veal were up by 9.3 percent. Vegetables went up 1.1 percent.

Why the Rise?

According to the report, “The impacts of the conflict in Ukraine and the recent increases in interest rates by the Federal Reserve are expected to put upward and downward pressures on food prices, respectively.” Poultry prices are high because there’s a lack of stored frozen chicken. Egg prices are high potentially because of the effects an ongoing avian flu outbreak, which is driving down supply. And as a society, we’re consuming way more dairy than we used to—bringing the price up 1.6 percent.

There are a host of factors contributing to the astronomical rise in food costs. This is resulting in many restaurants reacting in the most appropriate way they know how: by increasing menu prices. With the price of food projected to be on the rise for the foreseeable future, your business might benefit from a line of credit that can easily be tapped into as needed. The company with the best rates and most flexibility is ARF Financial. A line of credit from ARF Financial gives you peace of mind during times of uncertainty. Stabilize your cash flow as we put up to $750,000 at your fingertips—no collateral required. Want to learn more? Stop by today to see how ARF Financial can help fund your success.