FORT WAYNE, Ind. (WANE) — This year, the Biden administration expects inflation, along with economic growth, to reach their highest levels since the early 1980s, according to a New York Times report.
The Office of Management and Budget said it expected the Consumer Price Index inflation rate to hit 2.1%. Now, officials estimate it will hit 4.8% for the year, more than doubling its initial projection, according to the article.
Veronica Nigh, a senior economist at the American Farm Bureau Federation, said this “isn’t necessarily surprising” because of the amount of people who were able to work from home and save money during the peak of the pandemic.
“They’re out spending all that money that they’ve been saving, so of course that’s going to have an inflationary pressure on prices,” said Nigh.
One area feeling the impact of this is grocery stores — so much, in fact, that the topic was discussed during Kroger’s second quarter earnings call last Friday.
“In the second half of the quarter, we also saw higher inflation in some categories,” said Gary Millerchip, Kroger’s Senior Vice President and Chief Financial Officer on the call. “We are being disciplined in working with suppliers to manage these increases and are passing along higher cost to the customer where it makes sense to do so.”
Millerchip added that although its difficult to precisely predict, the company believes inflation for the full year will be higher than originally contemplated in Kroger’s 2021 business plan. It now projects inflation somewhere between 2 and 3 percent for the back half of the year.
So, what does this mean for shoppers?
“Unfortunately I think that means we’re going to be spending a little bit more on food,” said Nigh. “But, if you’re looking at spending more of your money at home or at the grocery store… food consumed away from home is quite a lot more expensive than if you go to the grocery store.”
According to the U.S. Bureau of Labor Statistics, the average cost of groceries for U.S. households is $4,643 a year, which works out to $387 per month. These numbers are based on data from 2019.
Therefore, if the grocery bill went up 3%, the average family would be spending about $399 a month. This works out to about a $12 monthly increase, or $144 a year.
You can figure out how much more your family could be spending on groceries here.
The price of meat soaring again is one of the factors driving up the cost. Nigh said compared to about a year ago, meat prices, which includes beef, poultry and pork have increased by about 5.7%. However, over the last six months the increase has picked up to over 6%, according to Nigh.
“Which is quite a lot faster than what we’re used to,” said Nigh.
As for when prices will go back down, Nigh says that depends on both the Federal Reserve and Congress.
“There’s a number of different things that can happen to try to rein that in once the experts and government officials say, ‘Whoa, I think I think things are heating up a little more than we’re comfortable with,” said Nigh.
WANE 15 also reached out to Meijer and Walmart to see if they’re expecting to see a price increase as well and have not heard back yet.
The link to listen to the full Kroger second quarter earnings call can be found here.