Food prices rise sharply before they even reach supermarket shelves.
Why it’s important: Americans are already paying more for their groceries. This week’s new inflation data suggests the pressure is not easing.
- Wholesale prices of fresh and dried vegetables jumped 27% last month, adding to a 31% price rise the month before.
- These are prices paid by food distributors, grocery chains and other companies to farmers and other producers for eventual sale to consumers.
- Overall, wholesale food prices rose 1.7% from a year earlier, ending a three-month streak of annual price declines.
Zoom: Unusually warm weather, crop diseases and insect infestations have reduced harvests of lettuce and other greens in California.
- The war in Iran, meanwhile, has driven up the cost of fertilizer and fuel, making it more expensive to grow and transport food.
- A regional grocery chain recently told Federal Reserve officials that it now costs more to transport a lettuce from California than to buy it itself, citing high diesel fuel prices.
- Truck transportation costs have risen nearly 25% over the past year, the largest annual increase since 2022 and comparable to the rise seen during the inflationary shock of the pandemic.
The big picture: It is unclear to what extent the increase in producer prices will be passed on to consumers. But stronger price increases were already visible at supermarket checkouts last month.
- Grocery prices rose 0.4%, the largest monthly increase in six months, driven by higher prices for meat, dairy and snack foods.
- Prices of fresh vegetables rose 2%, including an increase of almost 8% for lettuce prices.
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