Dinner will probably cost 20% more this year
Let the sticker shock begin: The upcoming American Thanksgiving holiday, a time when families and friends typically celebrate with groaning dressers, a stuffed turkey, and a more-is-better-than-less attitude, is going to cost about 20% more than last years, according to estimates prepared by the American Farm Bureau Federation in a annual survey of food prices.
Blame it on the weather, the Russian invasion of Ukraine, or companies’ drive to maximize profits, all of which have played a role in rising food prices, but this year’s increase is the biggest since the first Thanksgiving dinner of the Farm Bureau in 1986. reported Reuters.
Combined with last year’s 14% increase, the second largest, the price of a “classic” meal of turkey, stuffing, green peas, sweet potatoes, cranberries, rolls, and pumpkin pie for 10 people has since increased by more than up a third in 2020, at the start of the worst US inflation hike in 40 years, from $46.90 to $64.05.
“Those kinds of increases that we recognize are a burden on some families, there’s no question about that,” said Roger Cryan, the Farm Bureau’s chief economist, though he noted that discounts as the holidays approach could help consumers lower the bill.
US consumer prices rose 7.7% year on year in October and had risen as much as 9.1% earlier this year, prompting an attempt by the Federal Reserve to dampen price pressures with aggressive rate hikes.
Food prices, especially items bought for home consumption, have risen even faster, with an annual rate of 13.5% in August and still an annual increase of 12.4% last month, a shock to part of the family budget where prices had risen reliably less than incomes.
With food prices rising, a US Census survey showed that the share of households reporting food scarcity increased from 7.8% in August 2021 to 11.4% in early October.
“When you’re in the grocery store now, you see it, in every grocery store you go, people compromise,” Mary Daly, president of the San Francisco Fed, said last week. “How many people can they invite? What are they going to serve? Are they going to trade? Are we going to have a different kind of meal? Don’t we have so many options?”
As with other goods and services, there are a wide variety of forces behind the Thanksgiving food spike.
An outbreak of bird flu flocks of turkeysand while the supply is adequate, the Farm Bureau said the harvest of smaller birds along with higher feed prices increased the cost of that Thanksgiving chapter by 21% to an average of $1.81 per pound in the 224 stores where surveyors checked prices during the October 18 -31 period.
That accounted for about half of the $10.74 increase in the full price of the classic meal this year. The biggest percentage increase was for packaged stuffing, up 69% to $3.88, while a 1-pound container of carrots and celery rose just 8% to $0.88, and the price of cranberries fell 14%, to $2.57 for a 12-ounce bag.
For foods in general, key inputs such as fuel and fertilizer prices have skyrocketed, said Wendiam Sawadgo, an agricultural economics professor at Auburn University, with some Alabama fruit growers now spending $1,000 per acre on fertilizer, compared to about $600 in 2018.
“A big part was that Ukraine and Europe had no fertilizer production for a long time. That was a big problem,” he said.
Supermarket margins also increased during the COVID-19 pandemic. Net profit after tax was 3% in 2020 and 2.9% in 2021, compared to an average of approximately 1.2% from 2015 through 2019, This is according to data from the Food Industry Association. Those were the highest margins the association has seen in reports dating back to 1984.
Andy Harig, a vice president at the association, said the high demand for food at home early in the pandemic, when restaurants were closed or in-person dining was considered risky, gave food retailers leverage to boost profits. He said consumers also bought more higher-margin products such as fish and seafood during the crisis, while changes in shopping – including the rise in food delivery – allowed stores to reduce labor costs.
But he also said the net profit rate is expected to fall back to the industry’s long-term average of between 1% and 2%.
“It’s a penny business,” Harig said. As restaurants recover and wages rise, margins are likely already falling.
LAST MINUTE BARGAINS
Still, the rising cost of living is on the minds of U.S. officials, with consumer confidence nearing an all-time low after a year in which average gas prices hit $5 a gallon. Thanksgiving-related travel may at least be cheaper this year than it was, as airline and fuel prices have recently fallen.
And maybe there will be some rest on the food front as well.
Walmart Inc, for instance, said earlier this month it would leave prices for Thanksgiving staples unchanged from last year and keep them in effect through Christmas, including turkey for less than $1 a pound.
Reduced turkey prices often lure consumers to supermarkets and supermarkets, and the bargains increase as the holidays approach. The Farm Bureau noted that prices for frozen turkeys had fallen to 95 cents per pound as of this week.
Auburn’s Sawadgo said shopping for alternatives can also cut costs, with one of its personal favorites, kale, currently selling for $1.14 a pound, down 3 cents from last year, according to data from the U.S. Ministry of Agriculture.
Sawaggo recently priced the goods for a six-person Thanksgiving dinner at about $70.76, up 19% from $59.50 for the same basket last year.
“If you’re not one to buy advertising, maybe this is the year to do that,” he said.