Inflation continues to be on a tear around the world. It’s especially affecting the cost of food, a core component of everyday life.
To recap recent numbers, the Consumer Price Index (CPI), a primary measure of inflation, jumped 9.1% in June, a four-decade high. The CPI in July came in at 8.5% and 8.3% in August. These numbers are high, folks. While the context of rising inflation may get jumbled in the numbers, a trip to the grocery store brings it into sharp focus. Put simply, people need to eat- and food costs have risen faster than overall prices.
The price of groceries, technically referred to as ‘food at home’ as opposed to eating out or ‘food away from home’, rose 13.5% in August, the largest percentage increase since March 1979. Remember folks, the overall CPI was 8.3% in August. The cost of eating out (food away from home) rose 8% in August, lower than the overall rise but still the largest increase since October 1981.
Let’s take a step back here… since the late 2000s, Americans have been spending more to dine out than to eat in. When Covid hit, restaurant closures narrowed the gap significantly, but remained ahead of dollars spent to eat at home.
This trend will likely continue with grocery costs exceeding overall inflation while restaurant costs rise less than average.
Middle-income households feel the pinch more than others, seeing a greater share of income taken than low- and high-income households since 2019. Many are spending hundreds of dollars per month more on groceries and other household items in the face of steadily rising food prices.
Don’t expect a near-term solution to this pricing squeeze. For a visual representation, I have included an interactive chart below that breaks down the price direction of everyday items used across the economy, compared month-to-month over the past year. In viewing the graph, the orange squares make up the majority of the graphic and represent a price increase, while the blue squares represent price declines.
While the price changes vary, the cost of eggs went up 39.75%, and the cost of uncooked steaks actually went down 2.95%. Is there a sector change in price that surprised you?
~ Brian Kasal- The Leadership Matrix
P.S.- Did you see my last Leadership Matrix post? The Drying of the Colorado River
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