From bread to milk to a packet of chicken wings, most can buck the recent price swings by a dime. “It used to be like US$125 and now, it’s US$170,” Benito Co, 34, said of the cost of a 40-pound case of chicken wings he buys for his small restaurant, 6Co. “I’m crazy, I just don’t sell [them] currently.” The price of chicken has risen 19 percent over the past year, according to the most recent U.S. Consumer Price Index, which tracks prices for tens of thousands of goods and services. It’s just one of the impressive price increases that pushed the headline U.S. inflation rate to 9.1 percent last month, 1.4 percentage points above Canada’s a month earlier. In an average year, before the pandemic, inflation was closer to 2%. Selena Lewis, right, takes a selfie with her boss, Benito Co, in the kitchen at 6Co Eatery. Co said he had to take the chicken wings off the menu because they went up so much in price that he couldn’t sell them. (Selena Lewis) For Americans, like Canadians, it was most noticeable at the gas pump, where prices have risen 60 percent since last June. But the jump in the cost of staples like milk (16%), butter (26%), eggs (33%) and flour (19%) is also hitting consumers and small businesses hard. Fatma Nayir, 61, runs Mama’s Pizza Kitchen down the street from Co’s restaurant and pays $26.99 for the 50-pound bag of flour that used to cost $18. “Ground beef, flour, whatever I use [has gone up],” he said. A neon sign on the corner of Good Hope Rd. and Martin Luther King Jr. Blvd. marks the entrance to Anacostia’s historic district. The DC neighborhood was once home to famous abolitionist Frederick Douglass and has been revitalizing in recent years, but its residents still have some of the lowest incomes in the capital. (Kazi Stastna/CBC)
From eggs to pizza boxes
The price increases have been exacerbated by supply shortages that began in the COVID-19 pandemic and continue to plague businesses. When the paper pizza boxes necessary for her business started to become expensive and hard to find, Nayir discussed using trays. Plastic forks that were meant for customers are now dispensed sparingly behind the counter. Two months ago, facing DC’s minimum wage hike that started on July 1, it finally raised its prices by 10%. It’s not a move he made lightly in a region where 60 percent of residents earn less than $50,000 a year and the median household income is $37,963. “It’s really all over the place, top to bottom,” Laila Winborne, 35, said of the impact of inflation as she waited to get a pizza. The married mother of three works on the field at Nationals Park. Cutting back on family outings and other extras that many people find they have to do means fewer visitors and fewer shifts for Winborne. At home, Winborne struggles to maintain her own already expensive vegan diet and stretch her family’s grocery budget. A carton of 60 eggs used to cost her about $10 at her local Safeway, she said, but now it’s closer to $19. “At least if I go to Walmart, it’s $9, but because it’s Walmart, it’s always out of stock,” he said. “People who weren’t shopping there are now shopping at those lowers [priced stores]. It’s like, come on, this is our shop!’ People shop at a grocery store in Monterey Park, California. Milk costs 16 percent more on average than a year ago, according to the consumer price index compiled by the U.S. Bureau of Labor Statistics, which tracks thousands of products month-to-month . (Frederic J. Brown/AFP/Getty Images)
Fuel costs, wages drive up prices
So what’s driving the increase? Economists say it’s a combination of factors, including:
Fuel and energy costs, exacerbated by the Russian invasion of Ukraine. These affect everything from composting on the farm to refrigeration in the store and transportation in between. Post-pandemic labor shortages have pushed up wages, which are about half the price we pay at the grocery store, according to Christopher Barrett, an agricultural economist at Cornell University in Ithaca, New York. Pandemic-related costs, such as reorienting supply chains and dealing with ongoing outbreaks. Expanding the money supply through initiatives such as the COVID-19 stimulus programs and Federal Reserve actions.
“Farmers aren’t getting a windfall from high farm prices this year,” said Roger Cryan, chief economist at the American Farm Bureau, which lobbies on behalf of the farm industry. “After they’ve covered their transportation, shipping and marketing costs, they get about eight cents on the retail dollar to cover on-farm costs.” Cattle at the CS Ranch in Cimarron, NM, during a workshop on adaptive grazing and other forms of regenerative agriculture hosted by the Soil Health Academy in June. Some experts say growing demand for food requires more sustainable practices to address the effects of climate change on agriculture. (Mario Tama/Getty Images) The less processed a food, the larger its portion, he said. A bottle of milk, for example, can set the farmer back about half the retail price. The pandemic created high demand on tight supply as people stopped eating out and bought more groceries, and that increased the overall cost of food production, Cryan said. “If demand is growing rapidly, it can be very difficult to keep up.”
Food prices rise fast, fall slowly
Profit-driven markups are also likely a component of price increases, Barrett said, given the extent of market concentration in the food and grocery sectors. “There are underlying cost pressures in the economy that contribute to some of the inflation, but companies with market power see this as an opportunity to increase their profits even more on the backs of consumers.” Shoppers walk past bread on display at a supermarket in Alhambra, California. Bread and flour are among the staples that have seen sharp price increases. (Frederic J. Brown/AFP/Getty Images) Still, it seems like a relief, both Barrett and Cryan said. Natural gas prices have started to fall, averaging about $4.55 a gallon (Cdn$1.56 a liter) on Saturday compared with more than $5 last month, and President Joe Biden said talks of oil-producing nations this week will finally release more supply. Unfortunately for consumers, food prices are falling more slowly than they are rising, Barrett said. “Food price traders often comment that prices go up like a rocket and fall like a feather.”
“The cost of natural gas is killing us”
Meanwhile, ordinary Americans are saving where they can by cutting back on non-essentials like new clothes and snacks, buying less meat and using cost-saving apps. Heavy machine operators Charles Starling, 37, and Howard Fels, 31, try to keep driving to a minimum. Family vacations and weekend getaways are off the table for now, they said while taking a break from storm drain installation. Heavy-equipment operator Charles Starling, 37, commutes about 25 miles from his home in Laurel, Md., to his job in D.C. and feels squeezed by gas prices, which until recently hovered around $5 a gallon. gallon compared to about $3 a year ago. (Kazi Stastna/CBC) “The cost of gas is killing us,” said Starling, who lives in Laurel, Md., but works in D.C. “I have to travel at least 26 to 27 miles [about 42 to 43 km] one day.” Others get creative in belt-tightening. Chanel Williams, 35, is a single mother of a two-year-old and a 15-year-old. She is more involved in gardening and tries to reduce food waste by canning. “The things that are in my garden, like string beans, that would go bad, I can pickle them,” he said. “With cabbage, I’ve made kimchi.” Williams owns a home, works as a janitor on the city’s subway, and owns her own relaxation and decontamination business. But she still has to come to a local food bank for essentials like diapers and to meet all of her family’s food needs. Chanel Williams, 35, has found creative ways to save money and make food for herself and her two children last longer. She gardens, cans, freezes and cuts meat into smaller portions. She also receives help from a local food bank. (Kazi Stastna/CBC) “I rely a lot on grains and legumes, dry food,” he said. “I’ve broken portions of food and freeze thoroughly.” Most of the discussion about how the government can help Americans deal with inflation has focused on reducing tariffs on imports from China and gas tax holidays. But Barrett said Williams’ solutions are more in line with what governments should be doing. Climate change has decrease in agricultural productivity around the world, and if food supply is to keep up with growing demand, we need to do better at recovering food waste, boosting production of plant proteins and lab-grown meat, and expanding controlled-environment agriculture such as hydroponics and vertical farming, he said. “They need to double investment in R&D to produce more food using less water, less chemicals, closer to where people live and more cheaply.” WATCHES | Biden hopes Middle East visit will affect gas prices:
Biden is visiting Saudi Arabia for the final leg of his Middle East trip
US President Joe Biden traveled from Israel to Saudi Arabia for the final four days of his Middle East tour. Biden reaffirmed his commitment to the Israeli-Palestinian peace process, called for an investigation into the slain journalists and recommitted US interests to Saudi Arabia.
