Rising commodity prices hit Americans at home and on the road
NEW YORK – Rising prices for a variety of commodities are pushing up prices for consumers, with Americans paying more for meat, gasoline, items they keep in their homes and even homes themselves.
The government said on Wednesday that consumer prices jumped 0.8% in April from March, while the year-over-year increase was the fastest since 2008.
Corn, grain and soybean prices are at their highest level since 2012; the price of wood is at an all time high.
Many factors play into the price increases. As the economy strengthens, the demand for products exceeds the ability of manufacturers to produce enough raw materials. Many manufacturers are still understaffed as employment lags behind the general economic recovery. Businesses are also paying more for shipping as fuel costs rise and ports experience longer delays due to congestion.
Consumer goods are poised to become more expensive as the building blocks of these products become more expensive.
The higher costs of polyethylene, wood pulp, refined sugar and ground grains do not immediately resonate with consumers. But they mean higher price tags at the checkout for toilet paper, breakfast cereal, diapers, and just about everything in a plastic container.
Consumers have been warned: Cheerios maker General Mills plans to increase the prices of its products as grains, sugar and other ingredients become more expensive. Hormel Foods has already raised the prices of Skippy peanut butter and its turkey products. Soda giant Coca-Cola has said it plans to raise prices to offset rising costs.
Kimberly-Clark, which makes Kleenex facial tissues and Scott toilet paper, said the price increases would cover about 60% of its product portfolio. Procter & Gamble increases the prices of baby, women’s and adult care products.
Consumers also pay more at the grocery store for much of the meat they take home and cook, as well as their favorite on-the-go burgers and burritos.
The higher prices are the result of a number of factors, including the skyrocketing cost of feed for farm animals, much of which is made up of corn and soybeans. The price of corn rose 57% in 2021 and more than doubled last year, while soybean prices have increased by more than 25% since January 1. consumer.
One factor is the scarcity of supplies, in part because China buys huge amounts of soybeans and corn for animal feed as it continues to rebuild its plague-devastated pig herd. African swine in 2018. Scott Gerlt, an economist at the American Soybean Association, says soybean prices will remain high at least through the fall.
In an earnings call with investors, chicken farmer Tyson Foods said feed ingredients in the last quarter were $ 135 million more than in the same quarter last year.
Menu prices are on the rise. The Bureau of Labor Statistics said prices for the “food outside the home” category were up 3.8% in the 12 months ended in April. In addition to price increases for beef, poultry and fish, restaurants are spending more on labor, safety training and cleaning due to COVID-19, and are passing on some of those costs, according to the National Restaurant Association.
Few sectors of the economy have seen inflation escalate like the US housing market. The median price of a previously occupied U.S. home hit a record high of $ 329,100 in March, a whopping 17.2% increase from the previous year, according to the National Association of Realtors.
Behind the frenzy lies a shortage of available-for-sale homes, with an inventory standing at just 1.07 million at the end of March, down 28.2% from a year earlier early, according to the NAR. That translates to a 2.1 month supply, well below the six month supply according to economists for a balanced market. In March of last year, it was 3.3 months.
The shortage of homes and steadily rising prices began to dampen home sales, which fell in February and March.
Homebuilders are rushing to take advantage of strong demand, but it’s fueling inflation in building materials like lumber, which has more than quadrupled from a year ago, according to FactSet.
The cost of lumber adds about $ 36,000 to the price of an average new single-family home, according to the National Home Builders Association.
Although prices for building materials are still fluctuating, volatility has increased over the past year as the pandemic has resulted in plant closures, a shortage of truckers and other logistical issues that have made the chain unpredictable supply.
Energy prices stabilized in April but are still up 25% in the past 12 months, according to the BLS.
According to AAA, the average price of a gallon of gasoline surpassed $ 3 on Wednesday for the first time since October 2014. The price of oil is $ 66.40 per barrel, the highest since 2018; more people drive as the economy recovers from the worst of the pandemic; and parts of the country are seeing prices increase due to the closure of a major pipeline.
A year ago, a gallon averaged just $ 1.85 as people curled up in their homes at the very start of the pandemic.
Gasoline vehicles are also becoming more expensive. Prices for used cars and trucks jumped a record 10% in April. A global shortage of computer chips is reducing production and leading to higher sticker prices.
Journalists Alex Veiga, Matt Ott, Damian Troise, Dee-Ann Durbin and Martin Crutsinger contributed.