As the country is basically under an economic crisis due to COVID-19, there has been an up and down roller coaster at the costs of certain goods. For instance, gas prices have significantly declined. Clothing brands are offering 50% off online sales in order to make a profit. Plane tickets and hotel rates are as cheap as they may ever while grocery prices are increasing at a rapid pace.
After all, these are items and services that are non-essential as everyone is in quarantine. Shopping malls, movie theatres, and anything that is labeled as fun are now at the bottom of everyone’s priority list.
Transportation and “luxury” industries have declined.
Fitness studios and anything under that category have had to temporarily close down, causing them to offer services such as live stream classes at a lower cost than an in-person one would.
So why is it that your grocery bills have spiked?
Amidst the pandemic, grocery prices are rapidly increasing. In fact, according to the U.S. Bureau of Labor Statistics, the price for groceries showed their biggest increase in the last five decades – the last time being 1974. The price of groceries grew 2.6% last April. Grocery prices have spiked because the current situation with coronavirus has disrupted the food chain.
How exactly does this happen?
A basic rundown is that with restaurants completely shutting down or limiting their services to curbside pickup and delivery, more Americans find themselves cooking at home. And with the unemployment rate higher than ever, many Americans are cooking and eating all three of their daily meals at home. Factor in students who are at home participating in E-learning, then the need for more cereal, meat, eggs, and snacks rises.
There are more mouths to feed at a more frequent rate. The demand for food services in terms of restaurants and other establishments has seen a decrease of up to 90%.
The Labor Department released its monthly consumer report for the month of April. Cereal and baked goods saw an increase of 2.9% in price last month, with the cost of eggs rising 16.1%. Overall, Americans paid 4.3% for items such as meat, fish, and poultry. Donut prices have risen by 5%, while instant coffee prices have seen an increase of 2.5%. Certain items such as prepackaged salads have seen a decrease in price (3.6%).
Many Americans are buying out all the basic groceries at the supermarkets, with items such as flour, bread, and milk leaving the shelves almost as quickly as they are being stocked.
According to the International Grains Council (IGC), the price of rice trading has risen in the past two weeks. If one were to visit their local grocery store, they would see that many basic items are sold out, while specialty products such as gluten-free and keto ingredients are still widely available.
This is not the time Americans are going to be thinking of that specific diet of lifestyle. It is all about the essentials now.
Many grocery stores and non-essential stores have decided to opt-out of their spring sale promotions. This is in order to make sure social distancing is observed. Sales draw people, and lack of sales does the opposite.
In the current situation, we are in, stores and companies want consumers not only to feel safe but to stay safe.
Since many families are stocking up on groceries by making big bulk purchases to limit the number of times they physically go into the store or place an order for online delivery, some establishments have actually limited the number of specific items consumers can purchase.
For example, Costco is temporarily limiting meat purchases to 3 per customer. The decision to implement such a limitation is to make sure that all consumers have a chance of getting the groceries that they need; that the supply is divided as evenly as it can be in a time like this. Kroger has also limited the number of fresh produce customers can purchase.
Meat processing plants have shut down due to coronavirus outbreaks as almost 4,000 cases have been tied to meatpacking facilities. Tyson Foods announced that they will be temporarily cutting back the prices on select beef prices in order to allow families of all economic status to continue bringing quality meat to the table.
These discounts of up to 20-30% have also been implemented in order to help the company bounce back from the temporary closures of some of their facilities.
Closures were inevitable as staffing shortages due to the economic crisis and coronavirus outbreaks spread amongst the company.
Grocery stores are trying to offer products at the best value price they can, but with the current situation, many suppliers are pricing their items at a higher rate. The demand is high and in more normal time, it seems this would be the reasonable way to go, but these are anything but normal times – and grocery stores are hesitant to have to offer their goods at higher prices than they already are.
The high demand for products has caused trouble in terms of production. Many farmers and food producers are unable to keep up with this high demand, especially when the panic shopping took place in March. This is due to a shortage of labor in the farm industry.
In a nutshell, the prices of groceries and food are increasing not only because of an actual shortage of supply but because producers are unable to keep up with the demand.
With many stay-at-home shelter orders predicted to last much longer than originally anticipated and with the current situation up in the air, people can expect to be spending more time at home. This may lead to a continuing increase in the demand for groceries.
The rising demand for grocery goods will inevitably lead to an increasing spike for the price of groceries.
Many establishments have announced their plan to reopen with restrictions, such as social distancing of tables, shifts being limited and spread out, and occupancy numbers being cut down. While people spent the last two weeks of March panic buying groceries, many believe the consistent purchase of groceries in larger quantities is only going to continue.
The pandemic is not expected to go away overnight, and with the unforeseeable future, many are planning to continue stocking up on essentials.