Grocery prices are going higher later this year, according the United States’ largest supermarket by sales.
Kroger Co., which recorded $132 billion in sales in 2020, reports inflation is getting hotter than executives previously expected and that they believe prices will rise 2% to 3% over the second part of this year.
Management at Kroger competitor Albertsons Companies Inc. previously showed similar worries that inflation would increase in the second part of the year and that they too would increase some of the costs to pass the burden to consumers. Kroger is “passing these higher costs to the customer where it makes sense,” reported CFO Gary Millerchip in the company’s Q2 earnings call this past Friday.
More increases at the checkout would cause more pressure on American consumers who are already dealing with the largest increase in prices since Aug. 2008.
Inside the consumer price index, the sector for food has gone up six months and is higher 2.6% in 2021.
Half of the basket’s price increase is because of soaring prices for pork, beef and poultry. Beef prices have gone up 14% in 2021 while pork has jumped 12.1%, and poultry is now higher by 6.6%.
Prices were up in five of the six food groups for July, going down only for vegetables and fruits. The category saw prices go down by 0.9% after increasing 0.7% back in June.
The Fed has stated that the price boosts that have happened after the pandemic are “transitory” and that the pressures will go down as America’s supply-chain disruptions are handled.
The Biden White House, however, says problems with the supply-chain caused by coronavirus and greater demand are just partly to blame.
Instead the Biden Administration blames a lack of competition in the meat processing industry.
“Only four conglomerates have power over the majority of the market for all three products, and the data reveals that these firms have been increasing prices while creating record profits during the covid-19 pandemic,” said Brian Deese, the National Economic Council Director, at a media briefing last Wednesday.
Author: Scott Dowdy