The hidden costs of food: how higher prices affect families in the US

In recent weeks, those who went to the supermarket did not return very happy with what they saw. Understand why food prices have risen so much and what we can expect for the coming months and years.


US food prices are on the rise

empty supermarket trolley (higher food prices in US)
In the US, grocery carts are leaving stores increasingly empty. Understand what you are granting. Source: Pixabay

If you’ve been to the grocery store in the last few weeks, you must have been surprised by the higher food prices in the US. In fact, the main indicators showed a significant increase in the price of most foods for daily consumption. When we compare prices with last year’s prices, we notice a big difference.

Thus, flour and flour mixture, a basic ingredient of several products, grew by 14.2%. Butter and margarine also saw a similar increase: 14%. Meat, milk and fresh fruit also recorded double-digit increases: 13.8%, 13.3%, and 10.1%, respectively.

In addition, we are facing the biggest outbreak of avian flu since 2015. As a result, prices for poultry and eggs have soared. According to the United States Department of Agriculture (USDA), poultry is 7% more expensive and eggs are 4.5%. Indeed, the “culprits” for seeing higher food prices in the US are known.

So the Russian-Ukrainian conflict and the “sequels” of the pandemic sound like a good explanation. However, to understand what is really behind this increase, we need to dig deeper. In this article, we will investigate how these world events really affect the US economy. So, stay here and learn about the “hidden costs of food”.

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What is causing higher food prices in the US?

Indeed, higher food prices in the US can be explained as a by-product of global phenomena. In this way, a more detailed analysis allows us to understand how pandemic and military events affect our economy so much.

The price of fertilizers has gone up

Russia is known on the world agricultural scene as one of the biggest fertilizer producers. In fact, the Russians are also exponents of the production of pesticides. Thus, it is to be expected that an armed conflict involving that country generates uncertainty regarding this productive input.

The prices of fertilizers based on Nitrogen, Potassium and Sodium rose by almost 50%. Thus, this increase was passed on to the vast majority of products on supermarket shelves.

In addition, Ukraine is a major world exporter of wheat and maize. In this way, the conflict and the damage of war will generate an increase in the price of these inputs in world terms.

Most expensive labor

Man operating cutting machine
US labor costs are getting more and more expensive. Understand how this fact reflects on food prices. Source: Pixabay

According to Camila Abdelmalack, chief economist at Veedha Investimentos, hiring employees is increasingly expensive in the country. According to experts, unemployment rates are already close to the lowest rate in half a century, 3.6%.

Since the laws of supply and demand also work for work, it is now more expensive to hire employees.

More expensive energy

Food doesn’t arrive at your table if it isn’t through a complex transport network. This, in turn, depends on the price of fuel to price your service. As we are experiencing an increase in fuel prices, everything is expected to get more expensive.

Second, Donnie King, CEO of Tyson Foods, transportation costs influenced the 20% increase in the average price of products distributed by the brand.

Will food prices go down in the following months?

However, will higher prices in the US economy return to normal? Unfortunately, according to experts, it is still not possible to have high hopes. According to the World Bank, the effect could last for a few years. In fact, the latest reports indicate that this increase could continue until the end of 2024.

This state would be the result of a combination of the Russian-Ukrainian conflict and rising energy prices. In addition, inflation also contributed to the “plateau” of food prices.

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The effect of higher food prices on the US economy

Beggar on the busy streets of the United States
The effects of price increases are always felt most by the poorest. Source: Pixabay

When food prices and inflation rise, the poorest people suffer the most. According to Ayhan Kose, director of the World Bank’s Outlook Group, this is the population that needs more attention at times like the current one. Furthermore, high fees like this have a direct effect on the economy.

Undoubtedly, high prices tend to discourage consumption. In addition, higher food prices in the US economy also create pressure for higher wages. This effect is even more felt at times when the unemployment rate is decreasing. Thus, rising prices will fuel inflation until everything is under control.

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About the author  /  José Gonçalo

I started reading about finance only to find better options than savings. Since then, I have never stopped studying finance, and I believe that writing about it is the best way to help individuals feel fulfilled and have a healthy financial life. Today, I balance finance and medical school studies.

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