WHITE HOUSE POINTS INFLATION FINGER AT MEATPACKERS
Grocery prices are climbing at their fastest pace since 2008, with beef, pork and poultry leading the way — up nearly 13% since last November, said the government’s new inflation report. The White House pinned the blame for surging meat prices on meatpackers “taking advantage of their market power to raise prices while increasing their own profit margins.”
The monthly Consumer Price Index showed grocery prices were 6.4% higher than a year ago, part of a U.S. inflation rate of 6.8%, the sharpest 12-month increase since June 1982. “The indexes for gasoline, shelter, food, used cars and trucks, and new vehicles were among the largest contributors,” said the Labor Department report.
Prices of beef roasts and steaks rose roughly 25%, bacon 21% and chicken 9.2% in the past year, said the report. Prices were up for virtually everything on a consumer’s grocery list — apples and whole milk up about 7%, and salad dressing up 8%, for example. Potatoes and cheese, down modestly, were among rare exceptions.
A handful of companies dominate the cattle, hog and poultry sectors, “and these middlemen are using their market power to increase prices and underpay farmers while taking more and more for themselves,” said a blog by the National Economic Council, part of the White House.
Reports from four of the large processors, Tyson Foods, JBS, Marfig and Seaboard, indicate that their gross profits collectively have more than doubled during the pandemic, and their net income shot up 500%, wrote NEC director Brian Deese and two assistants. Beef, pork and poultry price increases accounted for a quarter of the overall increase in grocery prices, they said.
The meat industry dismissed the White House blog as an attempt to shift the blame for inflation. It said wholesale margins are falling as processors overcome supply chain disruptions due to the pandemic. Some of the largest slaughterhouses slowed production or closed temporarily in April and May 2020 because of outbreaks of Covid-19 among workers.
“Why the sudden inflation?” asked the North American Meat Institute. “The answer is consumer demand for meat and poultry product has never been higher.” Processors “are producing more meat than ever before under extraordinary circumstances to keep our farm economy moving and to put food on American’s [sic] tables,” said the meat industry trade group.
President Biden pointed to signs of vibrant economic recovery from the pandemic and indications of lower gasoline and car prices. “But we have to get prices and costs down before consumers will feel confident in that recovery,” he said. “That is a top goal of my administration.”
Americans spend nearly 8 cents of the consumer dollar on groceries, and another 6 cents on “food away from home,” such as restaurant meals, carryout, dining at school and businesses, and snacks from vending machines. At a combined 14 cents, food ranks second to housing, at 32 cents of the dollar, in consumer spending.
Posted in Daily