New York (CNN Business) Three years into the pandemic in the United States, the economy has changed in many ways that academics have yet to understand.
But food prices are on the rise, and the peak may still be miles away, writes colleague Daniel Wiener-Bronner.
Here’s the deal: Even though ingredients have gotten cheaper over the past year, food producers haven’t faltered. The reason: Well, why are they?
Indeed, food manufacturers have to factor in labor and transportation costs, which continue to rise compared to a few years ago. But at the end of the day, we’re not lowering our prices because we don’t need to. because, surprisethey make more money that way.
When inflation spikes like it hasn’t since 2021, it’s not uncommon for big companies of all kinds to take advantage of the moment and raise prices.
“Companies see these as occasional opportunities and don’t want to miss them,” Jean-Pierre Dubé, a professor of marketing at the University of Chicago Booth School of Business, tells Danielle.
Grocery prices will rise 11.3% from 2022 to 2023 for a variety of reasons.
For example, take an egg.
The price of eggs we pay in stores has risen nearly 140% between 2021 and 2022, and another 70% last year. Because of the devastating bird flu, rising feed and transportation costs, and producers raising prices to lock in prices. at a profit. (Price spikes are so bad that legislators are calling for an investigation into possible price spikes. You might say poultry play? (Sorry.))
Food companies aren’t the only ones capitalizing on the moment of inflation, anyway. But it’s the food that most Americans struggle with. Because you may forget your new sofa, car, or dishwasher, but everyone has to eat.
Many food companies anticipate that price increases may slow or pause, but they are not cutting prices, Daniel explains. ‘because. We are so used to paying more that we barely notice it over time.
“There is pressure on the supply chain and rising commodity costs. [companies] “To me, they’re totally profitable,” said Mark Lang, an associate professor of marketing at the University of Tampa who specializes in food marketing.
Businesses are keeping or continuing to raise prices at a time when many Americans are already struggling to pay for food, especially as pandemic-era food stamp benefits expire.
“This kind of activity, in the big picture, lowers the country’s standard of living,” Lang said.
Will the price ever drop?
Ultimately, yes…a little.
Some commodities, such as lettuce and tomatoes, have already dropped in grocery stores, said Tom Bailey, senior consumer food analyst at Rabobank. (Good news for salad-loving Americans…)
Bailey added that companies need to be careful when easing pricing.
“If you start to lower prices, it could undermine the value proposition that brands and manufacturers have built for consumers over the years,” he said. For example, when prices drop, people may think the food quality has gone down, or think they paid too much in the first place. (Of course it was.)
number of days
US job openings fell from 11.2 million in December to 10.8 million in January. This is a sign that the labor market is cooling very slightly and it is still too hot for the Fed to feel relieved.
The figure, part of a high-profile study on job openings and turnover, was slightly higher than economists had expected.
The data, released just as Federal Reserve Chairman Jay Powell began his second day of congressional testimony, suggests interest rates may have to stay higher longer to keep inflation in check. emphasized the Federal Reserve’s view that the
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