Don’t expect a mea culpa on food prices

By NewsPress Now

Inflation, when it involves food, is an equal-opportunity misery.

That isn’t necessarily the case with unemployment or even mortgage rates. If you’re fortunate enough to have stable employment or you aren’t in the market for a house, it’s possible to go on your merry way even as joblessness or borrowing costs accelerate. Someone could take mass transit or carpool when faced with rising fuel costs.

But everyone has to eat, which means no one is spared the impact of rising prices at the grocery store. Food prices increased 9.9% in 2022 – the biggest jump since 1979 – with staples like meat and eggs surging more than 20%. Food costs are still up 26% since 2019.

That doesn’t include the impact of “shrinkflation,” a price hike cloaked in smaller packaging for chips, cereal, coffee, etc.

What’s even worse is that these increases are baked into what Americans pay at the cash register. Even if the inflation rate goes down, prices aren’t going back to pre-pandemic levels.

So it comes as no surprise that voters, after forking over more and more just to put food on the table, are in a surly mood. A big part of the 2024 election will revolve around finding someone to blame for a $4 gallon of milk or $6 for a pound of hamburger. (Those are averages from the U.S. Bureau of Labor Statistics).

Vice President Kamala Harris identified a possible culprit in what she sees as price gouging in the food industry. Her economic plan has generated plenty of wonkish analysis on price controls, but the whole debate misses a bigger point.

After the worst bout of inflation in four decades, isn’t it time for an adult discussion on what exactly caused it?

It’s easy to blame grocery stores for the price of food, just like some would point a finger at gas stations when paying more at the pump. However, both industries operate on historically low margins, with 2% representing a good return for independent grocers. At some grocery stores, profits get redirected not into corporate largess but into turnstiles and armed guards designed to prevent the retail theft that eats into returns and plagues the industry.

Far from the campaign trail, the food ingredients industry is a big part of the St. Joseph economy. It’s hard to look at these companies – which are investing in St. Joseph and employing a local workforce – and see robber barons. Most are businesses squeezed by fuel, rent and raw material costs just like the rest of us.

Perhaps an honest discussion on the cause of inflation is too complicated for a 30-second ad. Maybe there is excess profit-taking at the corporate or commodity trading level, but you would have to throw in Federal Reserve monetary expansion and Biden-era fiscal spending as significant contributors to spiraling prices. The USDA – under the Biden administration – attributes the spike in food prices to pandemic-era supply bottlenecks, rising fuel costs, wheat shortages due to the conflict in Ukraine, and an avian flu outbreak that affected egg and poultry production.

A focus limited to price-gouging seems deflective at best, reckless at worst. The only way to prevent the next round of inflation is to reach a consensus on what caused the last one.