Why Does Food Cost More?

While the COVID-19 pandemic has been raging on for the past year and a half, the negative effects of the worldwide event continue to impact many Americans. According to the United States Department of Agriculture, “The CPI for all food has increased an average of 2.7 percent.” Prices for food available for purchase at grocery stores have risen 2.1% and prices for food obtained from restaurants have risen 3.3% in 2021. It is evident that the pandemic is the culprit for these massive increases as the cost for food sold through both retail and restaurants increased to 3.5% and 3.4% respectively during the height of the pandemic. To put things into perspective, food purchased from grocery stores only rose 0.9% in 2019, prior to the pandemic. But why is it that food is costing more? 

As a result of the pandemic, there is a decrease in workers and workers have to social distance, resulting in an uptick in labor costs across the U.S. In addition, there have been challenges involving the supply chain. The rising costs of gas and labor has resulted in a shortage of truck drivers.This leads to companies charging a higher price for the final goods in the supermarkets. One of the companies forced to raise their costs due to supply chain difficulties was General Mills. Executives at General Mills explained to The Wall Street Journal that, “Supply chain challenges are hampering General Mills’ ability to fulfill customer orders.” Along with these issues, the packaging that products come in has also seen a substantial price increase. Factories that produce plastics in the U.S were closed for lengthy periods of time. The state of Texas, a major manufacturer of plastic in the U.S, shut down many factories due to power outages and weather concerns. Materials such as wooden pallets and aluminum have soared in price due to production halts during the pandemic. These are used in the production of food packaging, and due to their uptick in price, companies adjust by increasing prices for consumers.
Empty shelves have also contributed to the inflated costs for groceries. Stockpiling, the act of buying products in bulk in order to not run out for lengthy periods of time, has contributed to price inflation. Panic-induced buyers are clearing the shelves of merchandise, making sure they have enough groceries to last them during times of uncertainty. With high demand and inadequate supply, merchants are choosing to raise their prices. Because the shelves are not sufficiently restocked due to supply chain issues, merchants are increasing their prices. In response, consumers must decide between accepting the higher prices or adjusting their purchasing habits accordingly.

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Photo Caption: Empty grocery store shelves

Photo Credit: Pixabay