A report from Purdue University found that the majority of consumers expect food prices to continue to rise next year, which could affect voter sentiment.
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Scott Olson/Getty Images
A report from Purdue University found that the majority of consumers expect food prices to continue to rise next year, which could affect voter sentiment.
Scott Olson/Getty Images
A lot goes into planning a personal budget – and food prices and how they fluctuate with inflation can be a big part of that.
According to the US Department of Agriculture, Food prices increased 25% from 2019 to 2023. And a report from Purdue University shows that a majority of consumers It is predicted that food prices will continue to increase next year.
Are food prices as bad as consumers think?
All things Considered host Ailsa Chang spoke with Joseph Balagtas, professor of agricultural economics at Purdue University and lead author of that report.
This interview has been lightly edited for length and clarity.
Ailsa Chang: Most consumers are predicting food prices will increase. And, yes, we’ve certainly seen food prices skyrocket during and after the pandemic. But what is really happening with food and grocery prices today? Are things as bad as some consumers fear?
Joseph Balagtas: So just two weeks ago the Bureau of Labor Statistics released the latest inflation data from the Consumer Price Index [CPI]. Food prices were 2.2% higher in March than in March 2023. So food prices increased 2.2% over the past year.
Often: And how bad is that?
Balagtas: That’s relatively low. Low compared to the food price inflation we have seen over the past two years. Food price inflation peaks in the summer of 2022 at around 10 or 11% per year and declines steadily, below 3% in 2024 and at its lowest level – 2.2% – that we have ever seen since then. [the] end of 2021.
Often: Yes. And now that it’s 2024, an election year, your report also looks at how people’s political leanings influence their views on inflation. I’m curious what you see there.
Balagta: Yes. So we asked monthly survey participants to tell us how food prices have changed over the past year. And it gives us a measure of inflation that we can compare to the CPI. And interestingly, over the past eight months, consumers have reported price inflation in the range of 6 to 7%, much higher than food price inflation, according to CPI.
Often: And how does that pessimism break down depending on political party?
Balagtas: It’s not just a political issue. Both Democrats and Republicans tell us whether inflation last year was higher than what we saw in the CPI. But Republicans are reporting an inflation rate … 1 percentage point higher than Democrats. So Republicans tell us 7.3% higher, Democrats 5.7% higher.
Often: Alright. Still, both sides are exaggerating food inflation. Why do you think that? Why do you think consumers seem to be overestimating the magnitude of food price increases?
Balagtas: It could be that consumers – they don’t measure prices compared to exactly one year ago, which is what the Bureau of Labor Statistics does when it reports 2.2% inflation. So they may be looking at a longer time period. You know, they might be thinking back to a time of “remember when eggs were like that”. We don’t necessarily have to live by the month and 12 months as the CPI is reported.
Often: And how much do you feel food prices influence how voters actually vote?
Balagtas: Yes, I think the economy in general affects the presidential election. I think good economic conditions help the incumbent, bad economic conditions hurt the incumbent. You know, we’ve never seen food price inflation like this in an election year. And so I’m not sure how to predict how that’s going to play out. But I think if overall price inflation picks up again in the next six months, I think that’s not going to be good for the incumbent.
Often: And as we get closer and closer to November, do you expect food prices specifically to be a key issue that all the candidates will talk about?
Balagtas: I would say that most of the factors driving higher food prices have disappeared. The remaining problem is high labor costs. And so we see higher prices or faster inflation in labor-intensive items, including restaurant meals and packaged foods. So we will see higher food prices for some items. I don’t think – and I certainly don’t hope – that we’re going to go back to the kind of fast food price inflation we saw last year or the year before.
The radio version of this work was produced by Elena Burnett and edited by William Troop.
