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07/14/2020

Beef Prices Prompt Spike in Food Costs

Gina Acosta
Executive Editor
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Beef Prices Lead Spike in Food Inflation
The Labor Department said on Tuesday the CPI increased 0.6% last month, the biggest gain since August 2012.

Sharp increases in the price of groceries led the Consumer Price Index (CPI) to rise by the most in nearly eight years in June.

The Labor Department said on Tuesday the CPI increased 0.6% last month, the biggest gain since August 2012, after easing 0.1% in May. The increase, which ended three straight months of declines, was driven by rises in the prices of food and gasoline.

According to the Labor Department, the food at home index rose 0.7% in June after increasing 1% in May. Five of the six major grocery store food group indexes rose in June. The index for meat, poultry, fish, and eggs increased 2% in June. This reflected another increase in the beef index, which rose 4.8% in June and increased 20.4% over the last three months.

The index for nonalcoholic beverages increased in June, rising 0.7%. The indexes for cereals and bakery products and for fruits and vegetables both rose 0.4%. The index for other food at home rose 0.2% in June. The only major grocery store food group index to decline was dairy and related products, which fell 0.4% in June, its first decline since July 2019.

The index for food away from home rose 0.5% in June following a 0.4% 
increase in May. The index for full service meals increased 0.9%, its largest ever monthly increase. The index for limited service meals advanced 0.5% in June after rising 0.6% in May.  

The food at home index increased 5.6% over the last 12 months, its largest 12-month increase since the period ending December 2011. All six major grocery store food group indexes rose over that span. The beef index increased 25.1% over the last 12 months, leading to a 12.8% increase in the index for meats, poultry, fish and eggs. The remaining groups rose more modestly, with increases ranging from 2.3% (fruits and vegetables) to 5.3% (nonalcoholic beverages). The index for food away from home rose 3.1% over the last year. The index for limited service meals increased 4.1% and the index for full service meals rose 2.7% over the last 12 months.

Also Tuesday, Adobe reported that online food prices have climbed 4.2% over the past six months.

Grocery prices typically increase in the second half of the year. But because of COVID-19-related factors, inflation on groceries surged 4.2% from January through June – a 500% increase (over average cumulative inflation levels for the same time period) as demand shot up for suddenly hard-to-find products.

“It will be interesting to see what unfolds as people feel more comfortable buying in stores again,” wrote Vivek Pandya, digital insights manager at Adobe, on a blog. “We’ve always thought of the online marketplace as a ‘value marketplace’ for consumers, meaning consumers can get a bit more bang for their buck, and this is supposed to be a more favorable time of year for them in terms of prices. But they aren’t getting that relief.”

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