Why vegetarians are winning the inflation battle
Now is a great time to become a vegetarian.
That’s because beef and pork-based foods are increasingly becoming more expensive. In June, Americans paid 4.5% more on the month for beef and veal and 3.1% more for pork, according to data from the Consumer Price Index published on Tuesday.
Beef steaks, roasts, pork chops, ground beef and ham saw the largest price increases over the past month compared to May: 6%, 5%, 5%, 3.4% and 3.1%, respectively.
In contrast, frozen vegetables and canned vegetables cost 1.2% and 0.7% less respectively last month compared to May, according to CPI data.
“In the meat space, the conversion of live animals into meat products is pretty labor dependent,” said Glynn Tonsor, an agricultural economist at Kansas State University.
In June, people paid 4.5% more on the month for beef and veal and 3.1% more for pork.
“Even before COVID, there were challenges having sufficient quality and quantity of labor,” he said, adding that breakout infections at meatpacking plants further magnified this resulting in vast shortages of meat in supermarkets.
Now the industry is struggling to hire more workers, while people in 24 states continue to receive an additional $300 a week in federal unemployment benefits, Tonsor told MarketWatch.
The governors of the other 26 states which include Texas, Florida and Ohio prematurely cut off jobless Americans from collecting the extra $300 a week in unemployment benefits before it expires in early September.
They claim the benefits were overly generous, and helped keep Americans from applying to new jobs, especially given that there are currently a record 9.2 million openings in the U.S.
At the same time, consumers are paying more for meat simply because “they want more protein,” said Tonsor who publishes monthly research on consumers’ expectations on what they’ll pay for ribeye, ground beef, pork chops and bacon.
Some 129,000 agricultural workers are currently unemployed, according to the June unemployment report. Last June, some 87,000 people in the industry were unemployed.
‘The conversion of live animals into meat products is pretty labor dependent.’
The BLS doesn’t officially track job openings in meat production but Tonsor said he’s heard numerous examples anecdotally of difficulty recruiting and retaining employees in the industry.
“Meat packers and processors are suffering from a labor shortage,” said Sarah Little, vice president of communications for the North American Meat Institute, a trade group that represents meat packers and processors.
“But demand remains very strong for meat and poultry,” she added.
The American Association of Meat Processors and the National Pork Producers Council did not immediately respond to MarketWatch’s requests for comment.
Besides labor shortages, corn, soybeans and grains used to feed livestock are also more expensive than they were last year, Tonsor said, “that gets passed on towards consumers.”
Eventually, Tonsor expects prices for meat to come down either because feed costs also decline or employers hire more workers.
In June, the cost of frozen vegetables and canned vegetables fell 1.2% and 0.7% on the month.
In the meantime, “there are reasons to be prudent,” he said.
“Watch your budget because lots of things are getting expensive, and we all have to eat.”
Americans paid 5.4% more for goods and services last month compared to June 2020. That amounts to the highest cost of living Americans have paid since 2008.
More broadly, the overall rise in inflation is being driven in part by the global microchip shortage, analysts say, which is propping up the prices of new and used cars, as well as a shift in shopping habits as Americans take vacations, go to sporting events and eat out.
The 10.5% increase in the price of used cars accounted for more than a third of the overall price increase last month. Food consumed at home and in restaurants was 0.8% more expensive last month compared to May, and accounted for 12% of the overall increase in inflation.