The price of groceries experienced the largest jump that the United States has seen since 1974.
Data from the Department of Labor released Tuesday revealed that grocery prices jumped 2.6% in the month of April. Prices climbed across the board, but the largest jump in prices was a 4.6% leap in the cost of meat, poultry, fish, and eggs. Prices on fruits and vegetables grew by 1.5%, and prices on cereals and bread products jumped 2.9%.
Two factors may have contributed to the jump in prices: increased demand and weakened supply. Peter Boockvar, chief investment officer at Bleakley Advisory Group, told CNBC that the factors allowed grocery prices to climb, while prices for all other goods dipped 0.8% during the same time period.
“Food price gains were robust, as we know there are empty shelves out there. Demand, we know, in most areas of the economy has collapsed, and prices are falling in response,” Boockvar said, later adding, “In areas where demand has hung in, like ‘food at home,’ we have inflation because the supply side has been damaged, whether directly via infected facilities or because of the higher costs of finding freight capacity.”
As Boockvar noted, infections in facilities have led to closures across the country, especially in meat processing plants. Smithfield Foods was forced to close one of its facilities in Sioux Falls, South Dakota, after an outbreak of COVID-19 infected hundreds of employees. That facility alone was responsible for 5% of U.S. pork production.
