It's almost time to start preparing your Thanksgiving meal for next week, and if you're hosting, brace yourself for high food expenditures. What effect will inflation have on your Thanksgiving shopping budget this year?
Everything has become more costly due to inflation, even Thanksgiving. The expense of the supper this year will be the highest ever. This year's Thanksgiving feast will cost far more than it did before to the pandemic due to a confluence of factors including labor shortages, conflict, increased petrol prices, difficult weather, and avian flu. Even while the cuisine will still taste fantastic, the fact that costs are thought to have increased by double digits may leave a bad aftertaste.
An inflated thanksgiving
The cost of household items used to make some Thanksgiving staples is increasing. According to a Labor Department report released on Thursday, grocery prices were 12.4% higher in October than a year ago.
This year, turkey might be even more costly and difficult to get. Turkey prices have increased by at least 17% as a result of inflation as farmers are forced to pay more for basic inputs including feed (wheat, corn, barley, and other grains), fertilizer, and labor. The avian flu, which has been reported to have afflicted more than 44.6 million chickens by the largest poultry producer in the US, exacerbates the effects of inflation.
Unbalances in the commodity market have also been caused by Russia's invasion of Ukraine. Following supply interruptions in one of the biggest grain producers in the world, wheat prices have reached record highs. 10%, 15%, and 13%, respectively, of the world's wheat, maize, and barley markets come from Ukraine. This has caused the cost of bread to rise overall, whether it be baguettes, biscuits, rolls, or rye.
Besides essential food, transportation and fuel costs are also significantly impacting households’ budgets.
This year, millions of individuals spend a lot of money traveling to see their distant relatives. Although there was a tiny decrease in airfare in October compared to September, prices are still roughly 43% more than they were a year ago, and yet, airplanes are still jam-packed.
Many people view visiting family for Thanksgiving and Christmas as a need that they won't forgo, despite the extra cost. This holiday season may be the first chance for several families to be together since the start of the outbreak.
People are spending aggressively despite their concerns. Some people are using their savings to help with costs since prices are rising more quickly than typical salaries. Despite the rising cost of holding a charge, some people still rely on credit cards. Credit card borrowing charges have progressively increased as the Federal Reserve has increased interest rates at their quickest rate in decades. As the Fed works to slow demand and rein in inflation, it has increased its benchmark rate by 3.75 percentage points since March. However, there is still opportunity for further increases.
But there is good news: inflation is decreasing. According to the most recent data from the Bureau of Labor Statistics, wholesale prices (PPI), a major indicator of inflation, increased by 8% in October compared to the same month last year.
It was a lot better than expected and the smallest increase since July of last year, albeit it was still historically high. This is the second data on inflation this month that indicates a slowdown in the economic slowdown-inducing price increases.
Core PPI prices, which do not include food and energy, were flat month over month, which was below the consensus estimate of +0.3% and the lowest monthly reading since November 2020.
Following news that consumer prices have also slowed, the October producer inflation figure is encouraging for the economy and provides yet another sign that inflation is beginning to go down. As the holidays approach, this is a good omen for family food expenses as well as evidence that the supply is becoming more balanced.
For instance, producer prices for new automobiles dropped to their lowest level since May 2017. Producer costs for transportation and storage also decreased for the fourth consecutive month.
Wall Street experienced its biggest gain since 2020 on speculation that the rate hikes appear to be taking effect. If the economic data continues to show inflation on the decline, the central bank may scale back the extent of its future rate hikes. This comes after signs that inflation should continue to decelerate into 2023.
Even though this year's turkey dinner is being severely impacted by inflation, there are indicators that help is on the way. Agriculture is expanding, weather patterns are stabilizing, and Ukraine's exports are rising. As a result, you could soon see lower food shop pricing.