ANALYSIS | Want to fight grocery price gouging and inflation? Do your duty and shop around | CBC News (2023)

FAQs

How do you beat inflation and save on groceries? ›

While food prices generally increased about 2% in prior years, they increased about 11% from 2021 to 2022. Inflation contributed to the increase. But there were other factors—like global disruptions to the food supply chain—that may have had a greater impact. And not everyone felt this increase the same way.

Food prices are projected to rise in 2023, albeit at a slower pace than they did in 2022, according to the USDA.

Contractionary monetary policy is now a more popular method of controlling inflation. The goal of a contractionary policy is to reduce the money supply within an economy by increasing interest rates. 5 This helps slow economic growth by making credit more expensive, which reduces consumer and business spending.

It was a bad year for food shortages in 2022, with categories including eggs and baby formula hit hard. Unfortunately, 2023 could see its own batches of food shortages. Here's what consumers should start stocking up on now before prices soar and products likely become harder to find on store shelves.

It has been attributed to various causes, including pandemic-related economic dislocation, supply chain problems, the fiscal and monetary stimuli provided in 2020 and 2021 by governments and central banks around the world in response to the pandemic, and price gouging.

Will inflation go away in 2023? ›

The "slowing economy is likely to bring the yearly inflation rate down to around 4.0 percent by the end of 2023," Kiplinger predicted.

Now, the 8.7% COLA for 2023 is outpacing current inflation, with a 5.8% increase over the past 12 months for the consumer price index for urban wage earners and clerical workers, or CPI-W. The Social Security Administration uses the CPI-W to calculate the annual COLA adjustment.

Chicken and eggs

A dozen grade A eggs cost, on average, $4.25 in December—making it the grocery stable with the largest year-over-year price increase.

Managers should consider these three strategic options, especially if inflation persists: recalibrate and clean up the product portfolio, reposition the brand, or replace the price model. These options are not mutually exclusive, so managers could also pursue a combination of them.

Other policies to reduce inflation can include tight fiscal policy (higher tax), supply-side policies, wage control, appreciation in the exchange rate and control of the money supply. (a form of monetary policy).

Facing higher prices, workers demand higher wages. That fuels further inflation. In extreme cases, it can trigger what's known as a wage-price spiral, in which higher pay and higher costs become a loop unmoored from what's happening in the larger economy.

Economists agree that supply chain issues are a major driver of the price hikes we've been seeing. In the food industry especially, transportation disruptions due to the pandemic and higher grain prices have made a significant impact.

Even during times of high inflation, people need to eat, meaning grocery stocks tend to perform better than other industries in volatile markets. Grocery stores can pass along rising costs to consumers, offsetting a decline in revenue.

What foods are not affected by inflation? ›

For those who want a quick and easy answer: It's generally cheaper to cook food at home than eat out. The reason so many people can get stuck on the question is the human psychology variable. People don't always spend wisely, and it isn't as if prices are always the same at a supermarket or a fast food restaurant.

In addition to taking a bite out of discretionary spending, increasing food costs have pushed inflation higher and pose a serious risk to global economic recovery. This is especially true in emerging markets, where food represents a large share of overall consumer spending.

Champagne will be in short supply in 2023, not just because of the drought, but because demand has rebounded from the pandemic faster than producers can create the bubbly beverage. Butter, corn, tomatoes and eggs are also on the list of potential shortages, as well as baby formula.

Inflation is an increase in the prices of goods and services over time due to an imbalance between demand and supply. Increased costs including wages, government policies, and devaluation of the dollar all play a role in inflation.

The consumer price index eased to 5% in March 2023 on an annual basis, down from 6% in February, according to the U.S. Bureau of Labor Statistics inflation report. Energy and food prices declined in March. Housing prices have proven stubborn, but are expected to start falling in coming months, economists said.

Almost two-thirds of chief economists believe a global recession is likely in 2023; of which 18% consider it extremely likely – more than twice as many as in the previous survey conducted in September 2022. A third of respondents consider a global recession to be unlikely this year.

What is the highest inflation rate in US history? ›

Inflation Rate in the United States averaged 3.30 percent from 1914 until 2023, reaching an all time high of 23.70 percent in June of 1920 and a record low of -15.80 percent in June of 1921.

Inflation has not affected all food equally, though. Pantry staples that have stayed below the average increase include potatoes, cheese, tea, tomatoes, pasta, bread, ice cream, and fresh, processed, and frozen vegetables. On the opposite end, price increases for steak and bacon remain in the double digits.

Why grocery stocks hedge against inflation. For two reasons, grocery stocks tend to fare better than most other stocks. First, regardless of what happens in the economy, people need to eat. Because food is a necessity, the higher costs of groceries from inflation can easily pass on to the consumer.

Economists agree that supply chain issues are a major driver of the price hikes we've been seeing. In the food industry especially, transportation disruptions due to the pandemic and higher grain prices have made a significant impact.

Inflation is putting the fast food industry in a weird spot. Chains face rising costs for labor and ingredients, which are forcing them to raise prices. But at the same time, inflation puts consumers in the mood for value meals — even if “value” is a relative term.

The Fed has several tools it traditionally uses to tame inflation. It usually uses open market operations (OMO), the federal funds rate, and the discount rate in tandem. It rarely changes the reserve requirement.

Commodities like gold, oil, and even soybeans should increase in price along with the finished products that are made with them. Inflation-indexed bonds and Treasury Inflation-Protected Securities (TIPS), tend to increase their returns with inflationary pressures.

Will inflation go down in 2023? ›

Ben Johnson, Chief Operating Officer of Kapitus, says, “We expect inflation to remain above the Fed's 2% target rate throughout 2023… [and] we do expect the Fed's action to ultimately succeed in slowing the economy and reducing inflation rates, especially in the second half of the year.”

Those lead to rising energy prices, rising transportation costs, rising labor costs. On average, 16 cents out of every dollar spent on food can be tied back to the farm. Everything else, the vast majority, has to do with things like processing cost, transportation, the wholesale and the retail trade.

Canned foods, pet food and beer may be in short supply due to a widespread aluminum shortage. Lettuce crops and orange groves were affected by plant viruses. One major producer of lettuce lost 80% of their crop in 2022.