Stew Leonard Jr., President and CEO of Stew Leonard's, joins Worldwide Exchange to discuss food inflation and supply chain costs, and how prices could be higher this holiday season. For access to live and exclusive video from CNBC subscribe to CNBC PRO: [ Ссылка ]
There’s going to be an extra guest at Thanksgiving dinner this year, making it more expensive than ever.
It’s inflation.
In October, the consumer price index — a basket of goods — rose 6.2% from a year ago and hit a 30-year high, according to data from the U.S. Bureau of Labor statistics.
And under those headline numbers, food costs rose 5.3% on the year, with the largest gains driven by price increases of meat, poultry, fish and eggs.
“Inflation remains stubbornly high, to the surprise of many that expected prices to come back to earth sooner,” said Ryan Detrick, chief market strategist at LPL Financial. “The truth is you can’t shut down a $20 trillion economy and not feel some bumps as it restarts, but we are hopeful the supply chain issues will resolve over the coming quarters and inflation should calm down as well.”
The USDA is also projecting that food-at-home costs will be up 2.5% to 3.5% for the entirety of 2021.
“I wouldn’t be surprised if we see the Thanksgiving basket up about that percent,” said Veronica Nigh, senior economist at the American Farm Bureau Federation.
The expected increase will be a shock to many households already feeling the pressure of higher prices. In comparison, in 2020, the average price of Thanksgiving dinner declined 4% from the previous year to $46.90, or about $5 per person, according to the Farm Bureau.
Why prices are going up
There are a few reasons nearly all the ingredients seen in a Thanksgiving dinner will be more expensive this year.
Supply chain issues have persisted throughout the pandemic and have raised costs. This may contribute to limited supply, as some foods take longer to be delivered.
There are other deficits that may be pushing prices up, as well. Turkeys, which are generally the most expensive item in a Thanksgiving feast, are in shorter supply this year than they were last year.
“It’s probably the lowest bird inventory we’ve had for perhaps 10, 11 years,” said Curt Covington, senior director of institutional credit at AgAmerica.
Turkeys between 8 pounds and 16 pounds cost 25 cents per pound more than they did a year ago, while prices for birds between 16 pounds and 24 pounds are about 21 cents more expensive, according to an Oct. 29 report from the Department of Agriculture.
Other costs associated with Thanksgiving dinner have also gone up — gas prices have increased nearly 50% on the year, appliances are 6.6% more costly and even things such as cookware and tableware are more expensive.
“Just the cost of metal to put cranberries into a tin can has gone up,” said Covington. “It’s across the board and it’s going to take the supply chain well past Thanksgiving and Christmas to get back to normal.”
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