Food prices will keep climbing – with no end in sight — as inflation continues to take hold of the US economy, some of the nation’s leading food suppliers and restaurant chains said.
Kraft Heinz, Tyson and Campbell Soup all warned they would raise prices on certain products due to skyrocketing costs for labor, packaging, ingredients and transportation, according to a report in The Wall Street Journal.
Fast-food joints like McDonald’s, Shake Shack and Cracker Barrel have also signaled feeling the pinch that in part has been passed onto consumers.
“Inflation is real, and it’s not going to get any better any time soon in the restaurant business,” Shake Shack CEO Randy Garutti said at an investor conference Tuesday, the report said.
The Labor Department said Friday that grocery store prices had spiked 11.9% in May over the last years, while those at restaurants and other food venues jumped $7.4%, marking the biggest increase in more than four decades for both.
Kraft indicated it would raise prices in August for multiple items, including Miracle Whip, Classico pasta sauce, Maxwell Coffee and some deli meat, the Journal reported.
Campbell Soup announced in April it planned on raising prices for the third time in the past year, with increasing cost on some condensed soups hurting sales to baby boomers, CEO Mark Clouse said, according to the report.
“We know the pressure that consumers are feeling,” Clouse said on a Wednesday conference call.
Tyson Foods said it increased beef prices by an average of 24% over the three months ending April 2, and Sanderson Farms, the third-largest chicken producer, said last month the cost to its products jumped 34% for the quarter that ended April 30, the Journal reported.
Hormel Foods, the maker of Spam, said prices for corn and soybean meal for livestock feed surged more than 125% and 40%, respectively as of early May. Those eye-watering prices are expected to continue, in part due to cold and wet weather in the Midwest this spring.
Industry executives told the Journal that more people are opting for cheaper brands as a result of the sticker-shock at the cash register, or choosing to eat out less often.
The average American household has been forced to cough up an extra $460 per month, as surging prices for food and fuel put family budgets across the nation under strain, according to an analysis from Moody’s Analytics senior economist Ryan Sweet.
Talks between grocery stores and vendors have become more often tense, because retailers fear they’ll lose shoppers due to the higher prices, industry execs told the Journal.
McDonald’s, meanwhile, is examining whether customers can bear the price increases, said Ian Borden, head of the company’s international business, during an investor call.
“We have the approach that we want to do more frequent increases but at smaller levels,” Borden said, according to the report.
To offset white-hot inflation, some companies are selling smaller packages for higher prices per ounce, the newspaper said.
The steady price spikes can be attributed to multiple factors, including increasingly expensive fuel prices, Russia’s invasion of Ukraine, lousy weather in big crop producing regions, short-staffed meat factories and the rampant bird flu that has led to the death of 40 million birds, the Journal reported.