U.S. Food Prices Continue to Plummet
Food prices in the United States continue to drop and show no sign of slowing, according to new research. Prices have been dropping for nine months, the longest consecutive drop the country has seen since 1960, with the exception of the financial crisis in 2009.
Such a drop in prices is almost unheard of outside a recession, according to reports from Bloomberg.
“The severity of what we’re seeing is completely unprecedented,” Scott Mushkin, an analyst at Wolfe Research who has studied grocery prices around the country for more than ten years, told Bloomberg. “We’ve never seen deflation this sharp.”
Food prices will likely continue to drop, given the USDA’s latest projections for meat production. The report, released Monday, shows that a projected increase of meat production, given lower feed costs, will likely cause the cost of beef and pork to drop an additional ten percent over the next decade.
The USDA posits that this price drop will lead Americans to consume about eight pounds more meat per year than in 2015. “Cheaper prices will help reverse a multiyear decline in meat consumption in the United States,” the agency writes.
Many experts claim that such drops in food prices are due to chains attempting to draw in more shoppers by lowering their prices, given the increased availability of inexpensive grocery chains, such as Wal-Mart, Aldi, and Lidl, as well as online distributors such as Amazon. This strategy has caused America’s largest grocer, Kroger, to lose more than a quarter of its value, according to GrubStreet.
“It starts to border on irrational pricing,” said Jennifer Bartashus, an analyst at Bloomberg Intelligence. “People are lowering prices just to draw traffic, without thinking about their margins.”
Some experts also attribute the drop to the low cost of commodities such as oil and grain.
Other countries, such as England, have displayed similar drops in food prices as of late.
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Supermarket shopping image via Shutterstock
