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Food prices are increasing at fastest rates in 40 years, says USDA

Food prices were revised upward all categories except vegetables, as Russia/Ukraine situation and interest rates impact pricing

While the restaurant industry has been grappling with food inflation this year — and many operators have had to implement multiple menu price hikes as a result — these challenges are not going to end any time soon, according to the U.S. Department of Agriculture food price outlook for 2022 released on March 25.

According to the USDA’s March report, grocery and restaurant prices will continue to rise between 4.5-5.5% in 2022, with food-away-from-home prices expected to be impacted the most, between 5.5 and 6.5%. Food-at-home prices are expected to increase by 3-4%.

From February 2021 to February 2022, food prices increased by 7.9%, which was the largest price jump in one year since July 1981.

“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,” the USDA’s March report reads. “The situations will be closely monitored to assess the net impacts of these concurrent events on food prices as they unfold.”

According to the USDA, prices in all food categories are expected to go up throughout the rest of 2022, and at least half of all categories will experience double-digit inflation. Food prices were adjusted upward in this report in all categories except for fruits and vegetables. Here is what the year in price inflation could look like across food categories, where the beef and veal category continues to see the most runaway price inflation:

  • Beef and veal: +16.2%
  • Pork: +14%
  • Poultry: +12.5%
  • Fats and oils: +11.7%
  • Eggs: +11.4%
  • Fresh fruits: +10.6%
  • Fish and seafood: +10.4%
  • Cereals and bakery products: +7.8%
  • Processed fruits and vegetables: +7.6%
  • Sugars and sweets: +7%
  • Dairy: +5.2%
  • Fresh vegetables: +4.3%

In response to these ongoing price increases across the food supply chain, restaurant operators are nearly universally raising prices or considering it. In Q4 2021, NRN noted at least 12 restaurants mentioning menu price increases, including Wendy’s, Papa Johns, Burger King, Chipotle and Starbucks. And customers are noticing this trend: According to the fourth quarter Yelp Economic Index, reviews mentioning menu prices increasing have grown 29% from the fourth quarter of 2020 to the fourth quarter of 2021.

Contact Joanna at [email protected]

Find her on Twitter: @JoannaFantozzi


TAGS: Finance
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