Grocery prices ticked up 0.3% in July, after staying flat in June, driven largely by rising beef prices.
From June to July, adjusted for seasonal swings, the price of uncooked beef roasts spiked 6.5%, according to data released by the Bureau of Labor Statistics Thursday. Uncooked beef steaks prices rose 2.3% and uncooked ground beef rose 1.5%. Altogether, beef and veal got 2.4% more expensive last month.
The higher prices were recorded as the country’s beef supplies have been contracting. Extreme drought in recent years caused farmers to rapidly sell cattle because the conditions, plus with higher feed costs, made it expensive or impossible to maintain herds. That wave of sales, particularly of cows used to breed, led to supply constraints this year.
“Herd liquidation continues to tighten supply, leading to higher cattle cost,” said meat processor Tyson (TSN) CEO Donnie King during a call with analysts this week. The USDA said in July that the country’s cattle inventory is down 3% year over year. Tyson (TSN) reported that while its prices for pork and chicken were down in the quarter ending in July, beef prices went up.
Thursday’s government data reflects a similar trend. In the 12 months through July, uncooked beef steaks got 7.8% more expensive. Uncooked beef roast prices rose 6.3% and uncooked ground beef got 3.1% more expensive. Together, beef and veal prices rose 5.3%. But over the course of the year, pork prices overall fell 3.7% and chicken prices dropped 2.5%.
What else is going on in the grocery store
Beef wasn’t the only category that got pricier in July. Hot dog prices went up 2.7%. Apples went up 2.4%, citrus fruit 1.7% and ice cream rose 1.5%. Coffee and butter each went up 1%.
But lots of items got less expensive that month. Margarine dropped 2.4%. Egg prices continued their downward trend after spiking earlier this year, falling 2.2%. Chicken prices went down 1.1%, as did the prices for fresh fish and seafood. Milk ticked down 0.6%.
Altogether, grocery prices rose 3.6% for the year, higher than the overall 3.2% increase of consumer prices — but not by much. Food altogether, including menu prices, went up 4.9%.
Some items notched high price increases year-over-year in July.
Margarine rose 11.3%. Bread went up by 9.5% and flour by 8.5%. Rice spiked 6.5%, ham grew 5.7% and breakfast cereal went up 5.1%.
Sweets got more expensive, as well. Sugar itself has shot up 9.7% in July compared to the same period last year. Packaged cookies rose 7.9% and ice cream jumped 6.3%.
Meanwhile, apples went up 7.5%, and lettuce jumped 6.6%. Fruits and vegetables together rose 2.9%.
But there were price declines in that period, too.
Eggs plunged 13.7%, with bacon dropping 10.7%. Milk fell 3%, citrus fruit dropped 2.9% and chicken dipped 2.5%.
What’s going on with menu prices
In the month of July, menu prices rose a tiny bit, just 0.2%. But over the course of the year, menu prices went up 7.1%. Dine-in restaurants raised prices about 5.8% for the year, while fast food and fast casual chains increased menu prices 7.1%.
Restaurants have been raising prices as their own costs have gone up, and as diners have seemed to accept the higher prices. But lately, customers have been pushing back.
At Burger King and Wendy’s (WEN), restaurant sales went up in the second quarter, driven by price increases. But both chains reported negative restaurant traffic.
At Papa Johns franchise locations, which make up the majority of the chain’s roughly 3,400 locations, “Some of the pricing … had gotten out in front of where the consumer was willing to spend,” said Papa Johns CEO Rob Lynch during a Thursday analyst call discussing the quarterly results.
“April was the worst month that we’ve had since I’ve been at Papa Johns (PZZA),” in terms of sales at locations open at least a year, he said. Lynch joined Papa Johns (PZZA) in 2019.
