FMI Illustrates Pandemic’s Effect on Food Prices
FMI – The Food Association has unveiled what it calls a“web experience” to illustrate how the coronavirus pandemic has influenced grocery prices more than almost any other category of consumer spending. In April, the Consumer Price Index for food at home reported its biggest monthly increase since February 1974, and grocery prices showed a 5.6% increase for the period spanning June 2019 to June 2020.
“The food industry is sensitive to the fact that American consumers remain highly concerned about COVID-19 and food sourcing – but appear to be acquiring more confidence,” observed Leslie G. Sarasin, president and CEO of Arlington, Virginia-based FMI. “This web experience is designed to educate the public, so grocery shoppers better understand how food prices are determined and how the COVID-19 shock to the supply chain affected food prices.”
The website uses insights from “The Fundamentals of Food Prices: Costs, Consumer Demand and COVID-19,” prepared for FMI by Ricky Volpe, an associate professor at California Polytechnic, in San Luis Obispo. According to the report, the pandemic led to four major changes that affected food prices in a short period of time:
- A rapid shift to eating at home
- The loss of foodservice demand
- A rise in production and processing costs
- An increase in grocery stores’ operating costs
Added Sarasin: “Our research indicates there will continue to be a higher level of retail-sector food spending for the foreseeable future as home cooking displaces spending on foodservice. However, grocery shoppers can rest assured that cost increases are not related to increased profits, and instead result from a spike in expenses due to labor, lower-capacity production, cleaning and sanitation protocols, and even transportation demands.”
In addition to the web experience and report, FMI is offering a webinar series for the food industry to gain a deeper understanding of the economics of food prices, as well as resources to help shoppers facing food insecurity to access federal assistance programs.