On this week’s podcast, we talked about how inflation and a general increase in the cost of basic necessities — fuel, health care, etc. — are conspiring to prevent most Americans from seeing any real wage increases. Well, it looks like we can now add food costs to the list:
While had Campbell reported a 6.7% year-over-year revenue growth, its costs of goods sold rose 8.7%. Same thing at Smuckers: a 17% sales growth, but a 19% jump in costs. Even though Spam-maker Hormel had an 11% drop in hog prices, high feed costs hurt its Jennie-O Turkey Store division.
After years of absorbing these cost increases, its reached the point where there is little choice but to pass price increases on to consumers. According to an AC Nielsen survey, eight U.S. branded-food companies had raised prices by more than 2% over the 12 weeks ended Jan. 26. Annualize that, and its a nearly 9% price increase.
I could be wrong, but I believe that the cost of basics like food are not actually included when economists talk about the core inflation rate. So none of it actually counts!