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Whose economy is the ERS looking at?

The notion that food inflation will be held to 1.5% to 2.5% in 2022 seems like pure political spin.

Tim Hearden, Western Farm Press

February 3, 2022

3 Min Read
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Tim Hearden

Political spin certainly isn’t new in Washington, D.C., but the degree to which agencies engage in it through their manipulation of statistics still manages to raise eyebrows.

Take, for instance, the Food Price Outlook for 2022 published by the USDA’s Economic Research Service. According to the report, the agency’s researchers “project that prices for food-at-home, or food purchased typically from grocery stores or other food stores, will increase between 1.5 and 2.5% in 2022, lower than the 3.5% increase that occurred in both 2020 and 2021.”

Inflationary pressures differ by food category, the ERS’ report cautions. “For example, meat prices, which rose the most of any product groups, have been driven up by strong domestic and international demand, high feed costs, and supply chain disruptions,” the authors write.

(Wait, there’s high demand for meat? Weren’t plant-based proteins supposed to be the new rage? But I digress.)

They continue: “Winter storms and drought impacted meat prices in the spring, and processing facility closures due to cybersecurity attacks affected beef and other meat production in May.”

OK, this all may be true. But it’s hard to imagine that ERS’ researchers would be so cloistered that they don’t see that inflation is escalating. Four days before their Jan. 28 report came out, Kraft-Heinz told its wholesalers that its March shipments will be up in price by as much as 30%, with Oscar Mayer proteins and juice and drink categories showing the biggest increases, according to CNN Wire. Kraft-Heinz had already said in December it was raising prices on some items by as much as 20%.

“As we enter 2022, inflation continues to dramatically impact the economy,” the company told wholesalers in a letter viewed by CNN Business.

What’s more, escalating input costs for producers suggest the current inflationary cycle is more than just a temporary blip caused by things like weather. Diesel prices in late January were the highest in seven years, natural gas supply prices are about 90% higher in Pacific Gas & Electric Co.’s service area than a year ago, and raw materials – for everything from wine bottles to cattle fencing – are more expensive and harder to get.

Often inflation, if it lingers long enough, will lead to a drop in consumer demand. But it’s difficult to ask people to cut back on food, even though people like me might need to. Already, low-income households are spending about one-third of their budgets on food, according to Yahoo Finance.

So President Joe Biden’s administration can spin all they want to, but it certainly doesn’t appear that food inflation will be held to 2.5% for the year. And most people aren’t buying the spin; a recent ABC/Ipsos poll found 69% of respondents gave Biden poor marks for his handling of inflation, and only 1% of Americans view the state of the economy as “excellent.” One percenters, anyone?

The White House and its various agencies should stop spinning and start focusing on solutions.

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