How much grocery prices increased as inflation reaches 41-year high
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Inflation continued to climb in March, as prices for consumer goods rose by 8.5%, according to the Labor Department — the largest year-on-year increase since February 1981.
The consumer price indexAfter a 0.8% decrease in February, the Consumer Price Index (CPI) increased 1.2%. Inflation is driven mainly by gas, food and shelter.
The price of gasoline rose with Russia’s invasion in Ukraine. It increased by 18.3%, after having risen 6.6% in February. It is not surprising that most motorists are surprised by this, since the cost of one gallon of gasoline rose to $4.33 per gallon in March. This was nearly twice what it cost in January 2021 according to AAA data.
Housing costs are up by 5% because of a shortage. Prices in rental and home properties have risen.
The food costs continue to rise
The cost of fuel and housing is alarming, but prices for food are still rising steadily. Last month’s food price index saw a 1% increase, which is an 8.8% year-over-2018 rise. The monthly average increase in food prices over the past six months has been 0.8%.
It is now more expensive to prepare food at home than it was a year ago. This makes it harder for people to save money and eat out less. Comparatively, year-over-year the average price of restaurant and takeout meals has increased 6.9%.
Because of supply chain problems, disruptions in harvests, and rising labor costs, the price for food essential ingredients that are required to make meals has risen. The following prices have increased in recent years:
- Mixtures of flours and ready-to-use flours 14.2%
- Butter and margarine 14%
- Fish, meat and poultry: 13.8%
- Milk: 13.3%
- Eggs: 11.2%
- Fresh fruits: 10.1%
- Bread: 7.1%
- Fresh vegetables: 5.9%
Matt Dmytryszyn is chief investment officer of financial advisory firm Telemus. He says that restaurants have been less aggressive about raising prices than Grocers. According to him, “Restaurants are known for revising their menus on a regular basis. We would anticipate price rises in the future.”
We expect prices to be less skewed towards food taken home than those bought abroad.
What will happen to inflation?
While no one is certain when inflation will ease, there are some silver linings in Tuesday’s CPI Report. The index for all other items, except food and energy, increased 0.3% in March following an increase of 0.5% the month before. The result is that costs are rising for the majority of items, though they could be leveling.
In order to fight inflation, Federal Reserve expects to keep raising interest rates. introducing a 0.25% increase in March — its first since 2018.
This causes the central bank to raise the costs of borrowing money. It discourages spending which in turn leads to a decrease in inflation.
Federal Reserve Bank of Chicago President Charles Evans stated Monday that a more aggressive increase in interest rates is possible during the U.S. central banks’ next policy meeting, which will be held early May.
Evans suggested that Evans believes a rate rise of 0.50% “is evidently worthy” and it is possible.
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Don’t miss: Here’s an item-by-item look at how much more expensive your groceries are, due to inflation
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