Supermarket prices jumped 0.8% in November, pushing the inflation rate for food costs to 6.4% over the past year, the largest increase for a 12-month period since 2008.
The increase in grocery prices is a major reason for the overall increase in the Consumer Price Index, which was also up 0.8% in November and is up 6.8% over the past year, the Bureau of Labor Statistics reported Friday. That is the largest increase for a 12-month period since the period that ended in June 1982.
The continued inflation is posing a serious threat to President Joe Biden’s congressional agenda. Sen. Joe Manchin, a West Virginia Democrat whose support is critical to passing Biden’s Build Back Better Act in Congress, has repeatedly cited inflation concerns as a reason for delaying a Senate vote on the package of social spending and climate measures."
Biden told reporters Friday afternoon that inflation was "a real bump in the road. It does affect families. You walk into a grocery store and you're paying more for whatever you're purchasing."
At the same time, the White House's National Economic Council blamed the heavily concentrated meatpacking industry for much of the risk in food costs.
Meat prices "are still the single largest contributor to the rising cost of food people consume at home. Beef, pork, and poultry price increases make up a quarter of the overall increase in food-at-home prices last month," the White House advisers said in a blog post.
Increases in meat prices "are not just the natural consequences of supply and demand in a free market—they are also the result of corporate decisions to take advantage of their market power in an uncompetitive market, to the detriment of consumers, farmers and ranchers, and our economy," the advisers said.
Prices for all six major grocery store groups rose for the third consecutive month in November. Prices for meats, poultry, fish, and eggs rose 0.9% in November, with pork up the most at 2.2%.
The cost of cereals and bakery products increased 0.8% in November following larger increases in September and October. Prices for dairy and related products and for nonalcoholic beverages also rose 0.2% in November.
As significant as the increases in supermarket prices have been, energy prices continue to rise even more sharply, increasing 3.3% in November.
USDA’s Economic Research Service uses the CPI data as the basis for its monthly food price outlook, but the agency’s projections continue to be significantly lower than the CPI estimates. USDA last month projected that food prices would be up 2.5% to 3.5% for 2021 and 1.5% to 2.5% for 2022.
An analysis by ClearView Energy Partners said the November CPI could "push a final Senate vote on the BBBA into next year, leaving more time for the legislative text—including energy and climate provisions—to further evolve. In our view, delay does not doom the BBBA to defeat, but the ramp-up of moderate Democrats’ potential election-year fiscal concerns and the absence of a 'forcing event' (such as lawmakers’ rush home for holiday travel) could diminish its prospects."
The Senate Agriculture Committee's top Republican, John Boozman of Arkansas, said the November CPI "shows inflation at highest level in nearly 40 years. Why Democrats can’t understand how serious this is and work with us to curb inflation is baffling. They continue to ignore reality and pursue a reckless agenda that will make it worse."
But Senate Majority Leader Chuck Schumer, D-N.Y., argued that the BBB bill would be the best thing that Congress could do for consumers. "While Republicans are fighting to undo vital measures that combat the pandemic and help American families, President Biden and Democrats are laser focused on raising wages, lowering costs, and creating jobs in the near- and long-term," he said.
The North American Meat Institute, which represents processors, pushed back against the claims made by the White House economic advisers:
"In beef production for example, the same four firm concentration ratio has been operating in the market for nearly 30 years. Why the sudden inflation? The answer is consumer demand for meat and poultry products has never been higher. Members of the Meat Institute are producing more meat than ever before under extraordinary circumstances to keep our farm economy moving and to put food on American’s tables.”
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