Beef fuels biggest increase in grocery prices in nearly a decade

Grocery prices climbed by 5.6 percent, their largest 12-month increase since December 2011, although the U.S. inflation rate is a mild 0.6 percent, said the Labor Department on Tuesday. Beef prices skyrocketed by 25 percent, with most of the increase in the past three months when coronavirus outbreaks in packing plants constrained supermarket supplies.

June was the third month in a row of large increases in grocery prices, compared to year-earlier levels, said the Bureau of Labor Statistics.

“All six major grocery-store food group indexes rose over that span. The beef index increased 25.1 percent over the last 12 months, leading to a 12.8 percent increase in the index for meats, poultry, fish and eggs,” said the monthly Consumer Price Index report. “The remaining groups rose more modestly, with increases ranging from 2.3 percent (fruits and vegetables) to 5.3 percent (nonalcoholic beverages).”

Grocery prices are rising at the same time the US economy is shrinking and unemployment is the highest since the Depression due to the slowdown that accompanied the coronavirus pandemic. Researchers say food insecurity rates have doubled since late winter. Food prices usually track the overall U.S. inflation rate.

Gasoline prices are 23 percent lower than last June, said the BLS. Apparel prices are down by 7.3 percent but medical care services cost 6 percent more and housing costs are up by 2.3 percent.

Meat production is rebounding from slowdowns in April and May, says the USDA. It estimates output will be roughly 3 percent larger than predicted in late winter as cattle, hog and poultry farmers send more animals to slaughter.

Americans are spending a larger share of their food dollar on groceries so there is more competition for supermarket products, which helps to drive up prices.

The USDA forecasts grocery prices will rise by an above-average 3 percent this year, with beef and pork prices climbing at twice their usual rates. If correct, it would end a six-year run of low food inflation. For its forecasts, the USDA compares prices in one year to prices throughout the preceding year. The BLS looks at prices in the current month and prices a year earlier.