Grocery prices have jumped the most since 1979 in the past year

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Grocery prices continued to soar in the 12 months to August, climbing 13.5%, the biggest increase since 1979.

Many food categories saw double-digit year-over-year increases, led by eggs, which jumped 40%; margarine, up 38%; and flour, which jumped 23%.

In its latest monthly food price outlook, the Department of Agriculture said economy-wide factors including supply chain issues and energy, transportation and labor costs higher labor contributed to higher prices in all food categories.

The price of a dozen large Grade A eggs hit a record high of $3.12, up 82.3% from a year ago. The Department of Agriculture said an outbreak of bird flu has reduced egg-producing flocks, causing prices to spike.

“This outbreak has contributed to higher egg prices and higher poultry prices as more than 40 million birds, 189 commercial flocks and 39 states have been affected,” the department said.

But otherwise, continued cost increases across nearly every food category are “perplexing” given falling energy and commodity prices elsewhere, said Jayson Lusk, a distinguished professor and head of the department of Agricultural Economics from Purdue University.

One likely cause, he said, is the continued rise in labor costs in the food industry. BLS data shows hourly wages in food manufacturing hit a new high in August amid labor shortages, climbing about 6% year-on-year to $24.39.

If there’s any consolation, it’s that prices may soon start falling. A monthly survey by Purdue found that consumer estimates of annual food price inflation for the past 12 months and the next 12 months are down, which “suggests that falling price categories like gasoline could trick consumers into believing that food prices are falling.” too,” the survey authors wrote.

The USDA also said food price growth in many categories is expected to moderate by the end of the year and into 2023, helped by higher interest rates, lower commodity prices and lower energy prices.

For example, favorable growing conditions in places like Australia and Canada contributed to record wheat and wheat flour production volumes, the department said, putting downward pressure on agricultural prices and wholesale.

“Food prices are expected to rise more slowly in 2023 than in 2022, but still above historical average rates,” the agriculture ministry said.

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