Dinner will probably cost 20% more this year
Let the sticker clash begin: The upcoming US Thanksgiving holiday, a time when families and friends typically celebrate with moaning buffets, a stuffed turkey and a more is better than less attitude, will cost around 20% more than last year, according to estimates compiled by the American Farm Bureau Federation in an annual survey of grocery prices.
Blame it on the weather, Russia’s invasion of Ukraine or the desire of corporations to maximize profits, all of which have contributed to rising food prices, but this year’s jump is the most important since the Farm Bureau’s first Thanksgiving dinner cost survey in 1986, Reuters reported.
Coupled with last year’s 14% increase, which was the second highest, the price of a “classic” meal of turkey, stuffing, green peas, sweet potatoes, cranberries, rolls and pumpkin pie per 10 people has risen by more than a third since 2020, at the start of the worst US inflation spurt in 40 years, from $46.90 to $64.05.
“This type of increase that we recognize is a burden on some families, there’s no doubt about that,” said Farm Bureau chief economist Roger Cryan, though he noted that discounts as the holidays approach could allow consumers to reduce the bill.
Consumer prices in the United States rose 7.7% on an annual basis in October and had risen as much as 9.1% earlier this year, triggering an effort by the Federal Reserve to contain pressures on the prices with aggressive increases in interest rates.
Food prices, particularly items purchased for home consumption, rose even faster, reaching an annual rate of 13.5% in August and rising another 12.4% annually last month, a shock to part of the household budget where prices had risen less than income.
As food prices have risen, a US Census survey showed that the share of households reporting a food shortage fell from 7.8% in August 2021 to 11.4% in early October.
“If you’re in the grocery store right now, you see it, in any grocery store you go to, people are compromising,” San Francisco Fed President Mary Daly said last week. “How many people can they invite? What are they going to serve? Are they going to lower the prices? Do we have another type of meal? Don’t we have so many options?”
As with other goods and services, there are a wide range of forces behind the Thanksgiving food spike.
An outbreak of bird flu has cut flocks of turkeys, and while the supply is adequate, the Farm Bureau said the harvest of small birds as well as rising feed prices have increased the cost of this Thanksgiving showpiece. by 21%, to an average of $1.81 per pound in the 224 stores. where investigators checked prices during the period from October 18 to 31.
This was about half of the $10.74 increase in the total price of the Classic Meal this year. The biggest percentage increase was for packaged stuffing, up 69% to $3.88, while a 1-pound platter of carrots and celery rose just 8%, to 0.88 $, and the price of cranberries fell 14%, to $2.57 for a 12 oz. bag.
For food products in general, prices for key inputs such as fuel and fertilizer have skyrocketed, said Wendiam Sawadgo, a professor of agricultural economics at Auburn University, some Alabama fruit growers, per example, now spending $1,000 per acre on fertilizer, up from around $600 in 2018.
“A big piece was that Ukraine and Europe hadn’t produced fertilizer for quite a while. That was a big problem,” he said.
Grocery store margins have also increased during the COVID-19 pandemic. Net income after taxes reached 3% in 2020 and 2.9% in 2021, compared to an average of about 1.2% from 2015 to 2019, according to data from the Food Industry Association. These are the highest margins the association has seen in reports dating back to 1984.
Andy Harig, vice president of the association, said the high demand for food from home at the start of the pandemic, when restaurants were closed or in-person dining was considered risky, gave food retailers leverage to increase their profits. He said consumers also bought more higher-margin products like seafood during the crisis, while changes in shopping – including increased food delivery – allowed stores to reduce labor costs.
But he also said the net profit figure is expected to fall back to the industry’s long-term average of between 1% and 2%.
“It’s a penny industry,” Harig said. With restaurants recovering and wages rising, margins are likely already down.
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Still, the rising cost of basic necessities has been a major concern for U.S. officials, with consumer confidence near a low point after a year when gasoline prices averaged $5 a gallon. Thanksgiving-related trips this year could at least be cheaper than they used to be, with airline and fuel prices recently falling.
And there may be some respite on the food front, too.
Walmart Inc, for example, said earlier this month it would leave Thanksgiving staple prices unchanged from last year and keep them in effect through Christmas, including turkey unless of $1 per pound.
Reduced turkey prices often draw consumers to grocery stores and supermarkets, and the bargains intensify as the holidays approach. The Farm Bureau noted frozen turkey prices fell to 95 cents a pound this week.
Auburn’s Sawadgo said buying alternatives can also reduce the cost, with one of his personal favorites, collard greens, currently selling for $1.14 a pound, down 3 cents from than last year, according to data from the US Department of Agriculture.
Sawadgo recently priced goods for a Thanksgiving dinner for six at around $70.76, up 19% from $59.50 for the same basket last year.
“If you’re not someone who buys ads, this might be the year to do it,” he said.
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