Kroger Issues Warning as Inflation Balloons Beyond Company's Predictions
Inflation will be hitting Americans hard in the grocery aisle, as higher production costs mean higher prices for consumers at one top supermarket chain.
Kroger is “passing along higher cost to the customer where it makes sense to do so,” company CFO Gary Millerchip said Friday during a call on the company’s second-quarter earnings, according to Fox Business.
He estimated prices would rise 2 to 3 percent in the final months of the year.
Inflation has been stalking American shoppers as consumer prices have risen. As of July, the Consumer Price Index was up 5.4 percent from a year ago, the biggest year-to-year jump since 2008, according to Fox Business.
Food prices have been a big part of the increase. Beef prices have gone up 14 percent this year. Pork prices are up 12.1 percent while poultry prices have increased 6.6 percent.
Globally, July food prices were up 31 percent from July 2020, according to Bloomberg, which cited data from the United Nations’ Food and Agriculture Organization.
The Biden administration, which has been trying to soft-pedal talk of inflation, points the finger at processors of beef, pork and poultry.
“Just four large conglomerates control the majority of the market for each of these three products, and the data show that these companies have been raising prices while generating record profits during the pandemic,” Brian Deese, director of the National Economic Council, said last week, according to Fox Business.
In August, Department of Agriculture economist Carolyn Chelius said increases are likely to continue, according to AgWeek.
“We’re predicting beef and veal prices will increase 3-4 percent and pork prices 4-5 percent,” she said. Prices for fresh fruit will rise 5 to 6 percent, she said.
“Meats only make up about 22 percent of food at home prices and although prices have increased a fair amount over the course of 2021 so far and they will drive the price of food at home, there are other categories that haven’t increased that much so far this year such as cereals and bakery products,” Chelius said.
A USDA report in August agreed.
“Inflation in 2021 is already nearly 50 percent higher than average annual inflation only halfway through the year. Above-average inflation is expected to continue through 2022,” the report stated.
Food sector analyst Phil Lempert told Fortune in August that the trend is likely to continue.
“We’re going to continue to see price increases, probably for the next two years or so,” Lempert said.
Lempert told Fortune that increases transportation costs are hitting consumers, saying that the cost of refrigerated truck transport has risen by 12 percent.
“That has to be passed on,” he said.
“We don’t have enough truck drivers,” he said. “We’ve been talking probably for three or four years that the truck driver workforce is aging, retiring, and there’s not a lot of people who wake up in the morning who say, ‘I want to be a truck driver.’”
Lempert said that coupled with rising wages, “It is a much bigger problem, and a much more complex problem, than the average consumer realizes or understands.”
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