Consumers are choosing grocery stores more than ever to cover their meals as Americans face financial pressure associated with rising unemployment, and other food services, like restaurants, remain closed.
The increase in demand and shortages in food supply chains, such as meat shortages from coronavirus outbreaks in processing plants, is causing prices to go up at the grocery store.
Recent data released by the Bureau of Economic Analysis (BEA) tracking changing price indexes for certain goods from February to June found that meat prices increased across the board.
Poultry prices rose 11 percent, beef prices rose 20 percent, and pork prices rose almost 9 percent. Other household food staples increased in price too, as the cost of eggs jumped 10 percent, while cereals and vegetables rose a modest 4 percent in that period.
The Washington Post reports that the cost of groceries is growing at the fastest pace in decades, which could be especially harmful to unemployed Americans.
While the unemployment rate fell to 10 percent in July, millions of Americans continued to file or remain unemployed. Economists from both sides warn that without another fiscal stimulus, millions of Americans could face financial difficulties to high to overcome.
“Many of those people are going to find it hard,” Federal Reserve Chairman Jerome Powell said in a press conference. “They are going to need support if they’re to be able to pay their bills, to continue spending money,” and remain in their homes.
Consumer spending increased six percent thanks to states re-opening across the country. Still, the BEA reported that the increase could be a direct result of unemployment benefits, which are set to expire soon. Presumably, consumer spending at a similar rate may continue to drive up grocery prices unless supply chains either return to prior productivity levels or adapt to a coronavirus economy.
“The supply was not able to move to where the demand was, and that’s a big part of why you saw prices getting pulled up,” said Jayson Lusk, head of the department of agricultural economics at Purdue University.
If a plan cannot be made for federal stimulus, some consumers may look to cut back on spending, slowing down economic recovery.
“Cutting back on food budgets is one of the first things people do,” said Elaine Waxman, a senior fellow in the Income and Benefits Policy Center at the Urban Institute. “It’s a strategy for trying to cope with an economic shock or persistently limited resources.”
Waxman also noted that poverty, especially food insecurity, could lag despite improving unemployment figures.
The U.S. Census Bureau reported that out of 249 million respondents to a recent survey, 30 million said that they “sometimes” didn’t have enough to eat, and 5 million said that they “often” didn’t have enough to eat at some point during the week before July 21.
“For some goods, including food, supply constraints have led to notably higher prices, adding to the burden for those struggling with lost income,” Powell said.