Are Higher Food Price Impacting Consumer Demand?
Gone to the grocery store lately? Food prices are up and climbing. In fact, the USDA’s Economic Research Service says that the Consumer Price Index for all food rose one percentage point just between January and February of this year. February 2022 comparted to the same month in 2021 shows a 7.9% increase in food prices.
So higher numbers, but is it slowing down consumer demand? Dr. Scott Brown is an Associate Extension Professor of Agricultural and Applied Economics with the University of Missouri…
"I do think, as we have higher prices today, we do have to be concerned about consumer behavior to that. I say, equally important to this discussion is, if now I'm paying four dollars-plus for gasoline in many parts of the country, am I going to see a crowding out of food expenditures because consumers need to put gas in the fuel tank. Those things are certainly important. I will say, it's amazing how strong demand has been in the face of higher prices. So, we haven't seen consumers turn away yet, and we'll just have to wait and see whether there's some point in time where prices get high enough that it really affects consumption, but again, today I just see demand for meat products and food products generally has been incredibly strong.”
Brown says that 20% or less of the retail consumer dollar gets back to the farm level.