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Significant Increase in Food Price Inflation Came Well Before 2021
On a year-to-year basis, inflation was 5.4 percent in July of 2021, the largest increase since 2008, and there are expectations that the consumer price index (CPI) could continue to rise through the rest of the year.
But while the recent sharp rise in overall inflation in the last two months has gotten significant attention, food prices were already seeing a significant rise beyond the rate of inflation over the last ten years according to survey data from the Bureau of Labor Statistics (BLS).
Medium and higher income brackets—those earning over $6,400 in pre-tax income—in rural households saw a significant increase in weekly food expenditures per household size starting two decades ago even after adjusting for inflation. The same occurred for higher income households—greater than $60,000 in annual income—in urban locations.
In contrast, lower income households—those earning below $6,500 a year—in both urban and rural locations would see price deflation at times. Only in the last ten years and only in urban households would lower income brackets see an increase in food prices.
Inflation measured by the CPI is calculated by BLS using a price of a basket of goods that includes food but also gasoline and other commodities. That rate of inflation is used to measure the relative value of currency as well as host of other economic indicators.
While inflation can be a burden on consumers, food price deflation affects food producers who depend on higher prices to provide income that keeps up with higher costs for all goods.