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Americans are pissed off they're paying more for groceries these days

Nov 10, 2021, 03:12 IST
Business Insider
A supply shortage is causing food prices to soar. JUSTIN TALLIS/Getty Images
  • Americans have noticed the most dramatic price increases in their groceries, per BofA Research.
  • Food inflation is the result of bad weather, a labor shortage, and relentless consumer demand.
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Americans are fed up with their grocery bills.

Of all the goods and services that have experienced inflation this year, people have noticed price hikes for groceries the most. In a recent Bank of America Research note, a team led by Robert F. Ohmes surveyed over 1,000 Americans and found nearly 600 noticed the most dramatic price increases at grocery stores.

That's dramatically more than any other category. Restaurants, bars, and eating out came in second by a wide margin, with just about 200 Americans feeling the pinch there. Takeout and food delivery followed next, with about 175 respondents feeling the price hike.

That's all to say: Americans' pockets are hurting the most when it comes to food. Because groceries are everyday necessities, it makes sense that everyone is noticing the price of, say, milk going up more than anything else.

Food inflation has been slamming grocery stores, Insider's Grace Kay reported, as some companies jack up price tags and others are selling smaller quantities for the same price. The Consumer Price Index - a commonly used measure of US inflation - rose by .9% for all food (including restaurants) from August to September and by 1.2% for groceries specifically in the same time frame. Dairy prices have increased the most, by 2.2%, with prices for cereal and baked goods as well as nonalcoholic beverages each right behind with 1.2% increases.

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The price hikes are the result of a lot of things: bad weather, a national labor shortage, and consumer demand that is no match for the supply chain right now.

Inflation is hitting America

Major droughts in countries like Brazil and Argentina have been driving up prices for corn, coffee, and soybeans. Meanwhile, grocery stores are scrambling to find workers and raising wages to lure them in, hikes that could be getting passed down in food costs. Meat prices also surged recently due to a ransomware attack on JBS, a supplier that processes about 20% to 25% of the nation's beef, chicken, and pork products.

Then, there's the mess that is the supply chain affecting much of the economy right now. As stimulus checks and pandemic savings unleashed a wave of pent-up consumer demand that ran up against the widespread supply shortages and bottlenecks, businesses began to jack up prices and inflation hit Americans' wallets.

Companies had struggled to estimate demand correctly, while factory production was halted off and on during the work-from-home economy of 2020. The unpredictable surge in demand caused US shipping ports to become unusually congested as imports picked up speed, delaying shipments of all types, from sneakers to meat.

These problems were passed onto consumers in the form of soaring prices. The Consumer Price Index rose 0.4% in September, Insider's Andy Kiersz reported, exceeding the median forecast of a 0.3% gain from economists surveyed by Bloomberg. That's a 5.4% increase year-over-year when parts of the economy were still shut down last September.

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Food may be just one of inflation's many victims this year, but as the holidays roll around, it seems to be hitting wallets the hardest.

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