Follow Us

Log in

Rising food prices hurting Americans, but not as much as folks abroad

November 02, 2021 8:40 PM | Anonymous

Rising food prices hurting Americans, but not as much as folks abroad

Authored by Eric Przybyl

All around the world, food prices are going up, as with almost everything. These are all obviously due to supply chain issues related to the COVID 19 pandemic. However, food price increases are possibly where we could see the most grave effects of the pandemic supply chain disruption, as the world’s median income is under $10,000. This means that even a small change in food prices could hurt a large part of the world's population. This is what is addressed in an article by Fox Business entitled, “Food Prices Will Go Up ‘Tremendously’: Billionaire Supermarket Owner”. This claim was made by John Catsimatidis, the owner of Gristedes and D’Agostino Foods, who said that food prices in the US will go up by 10% in the next 60 days. The US has a lot of data on food prices that could be used to postulate about the current situation of the world, but it should be noted that the effects will be felt differently in different regions due to differences in wealth, government intervention, and supply chains. Between February and March 2020, the Personal Consumption Expenditures for food in the country jumped around 23% from $104.6 billion to $128.4 billion, by far the largest monthly jump in food prices since the data began. The next month expenditure dropped to $112.9 billion, but this was still more than the long term trend, and the monthly rate of change in expenditure since has also been higher than the long term trend.

Personal Consumption Expenditures: Food (Billions of Dollars)


Source: FRED

While these effects of government mandated shutdowns across the supply chain will put pressure on households, the jump in food prices actually reversed a downward trend whereas Americans were spending a smaller and smaller proportion of their income on food. From 1960 to 2021, this proportion went from 17% to 9.9%. This is due mostly to an increase in average real income, but also a historically moderate average food CPI inflation of 3.1%, slightly outpacing the average yearly inflation from 1920-2021 of 2.63%. Furthermore, only 1.5% of the US could not afford a healthy diet in 2019, a staggeringly low number compared to figures like 92% in Niger. Therefore, while this increase in price will have an effect on Americans’ disposable incomes, the largest effects of this food supply issue will affect the middle to lower income countries. It is thus important to monitor food prices and supply at home and abroad to determine the true effects of the COVID 19 pandemic on food supply and allocate resources accordingly.

Sources:

  • https://www.foxbusiness.com/money/food-prices-up-tremendously-billionaire-supermarket-owner
  • https://ourworldindata.org/food-prices
  • https://fred.stlouisfed.org/series/DFXARC1M027SBEA
  • https://news.gallup.com/poll/166211/worldwide-median-household-income-000.aspx
  • https://www.ers.usda.gov/amber-waves/2020/november/average-share-of-income-spent-on-food-in-the-united-states-remained-relatively-steady-from-2000-to-2019/
  • https://www.in2013dollars.com/Food/price-inflation


The Association of Industry Analytics is a 501(c)3 non-profit organization. 

Powered by Wild Apricot Membership Software