Americans will soon pay more in the supermarket

Food giants Kraft Heinz and Conagro Brands warn that they will likely have to raise prices for their food products this year. In this way, the inflation of commodity prices is taken into account, according to both parties.  

In the United States, retail sales rose 5,3% in January, compared to December. In addition, food production is almost back to pre-coronavirus levels. Consumer spending is the main driver of the United States economy. With spending on the rise, the country's central bank (Federal Reserve) expects the US economy to grow at an annualized rate of 9,5% in the first quarter. It is a positive turn, given that the bank had assumed 4,5% a week earlier.

But the fact that consumers want to spend more also has a downside. The fact that production is almost back to pre-crisis levels does not mean that all backlogs have been eliminated. In addition, livestock farming is currently experiencing difficulties due to the extreme winter weather in certain parts of the country. As a result, for example, various meat and dairy processors are shut down and slaughter weights (due to stressed animals) are lower. In short, there is a chance that demand will exceed supply.

Rising food prices lurking
Food companies Kraft Heinz and Conagro Brands are therefore warning that they will likely have to raise prices for some of their products this year. "We need to factor in commodity price inflation," both sides told Reuters. "Mac&cheese contains wheat, the desserts contain sugar and our mayonnaise contains oil. All these raw materials are now very expensive." Other food companies, such as Lipton and Unilever, have also indicated that higher prices are on the horizon.

For example, between Friday 12 February and Thursday 18 February, the price of the classic grated cheese rose by $0,14 to $2,56 per 200 grams. A block of cheese of the same amount now costs $2,62 in the United States, an increase of $0,19 from the previous week. These are just a few of the price increases that have already been made. In the coming months, Americans can therefore take into account that they will spend more in the supermarket.

Kimberly Baker

Kimberly Bakker is an all-round editor at Boerenbusiness. She also has an eye for the social media channels of Boerenbusiness.

k.baker @boerenbusiness. Nl

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