Food inflation should be a major component of your Christmas shopping budget.
My handy spreadsheet revealed that increasing food prices are putting a strain on household budgets as a result of the substantial dining bills that will accompany this holiday season.A general measure of food prices and their fast increase in recent years can be obtained by combining official pricing statistics from four major California regions: San Diego, the Bay Area, the Inland Empire, and Los Angeles/Orange County.
According to my combined Consumer Price Indices, the average Californian’s overall food and beverage expenses increased by 3.4% for the year that ended in October.
Food inflation has slowed, yes. The most recent apex of this benchmark occurred in February 2022, when a number of coronavirus contortions contributed to a 10% annual increase in food and beverage prices.
However, the compounding impact on our savings is not lessened by this statistical decline. According to CPI data, the cost of California food has increased by 27% in the last five years.
We may forego leisure, vacations, or even holiday presents when household funds are tight. Instead of hiring someone, we’ll drive a clunker, wear old clothes, or even think about doing things ourselves.
It is impossible to avoid purchasing food. The food inflation in California is problematically worse than the general increase in living expenses.
According to my CPI calculations, the cost of all goods and services in California increased by 2.5 percent over the previous 12 months. Once more, the most recent increase is below the previous peak, which occurred in June 2022 when global inflation increased at a rate of 8% annually.
However, the longer-term impact is linked to several financial concerns: Golden State customers have seen a 21% increase in overall prices since 2019.
In or out
How you feel about food inflation depends on where you eat.
Compare the costs of groceries with eating out to get a sense of how much California food costs.
Compared to the high inflation of 13% in July 2022, food prices at the market are up 1.1% annually. In five years, the grocery bill has increased by 28%.
Compared to the cost of eating out, that financial damage is minimal.
The cost of dining at a California restaurant increased 6.4% over the previous year, which is not too far off the 9.7% peak of February 2022 due to inflation. Additionally, according to my CPI data, eating out has grown 30% more expensive over the past five years.
Why? Higher operating costs, more expensive materials, and higher compensation for staff—assuming they can be found—are just a few of the difficulties restaurant owners have had to deal with.
Pick your poison
Inflation varies by aisle during supermarket shopping.
Almost every cost associated with growing food and delivering it to consumers has increased, including labor, energy, and materials. These difficulties are made worse by shortages brought on by anything from war to pests.
Consider the many price fluctuations in food categories that are monitored by regional CPIs and graded according to California inflation over the last 12 months.
Up 24% in five years and 2.3% annually. This inflation rate s monthly peak was 14% in May 2022.
Up 2.1% yearly and up 13% in five years. High? 11% in April 2022.
Up 1% yearly and 30% in five years. High? 15% in July 2022.
Off 0.4% yearly but up 29% in five years. High? 13% in May 2022.
Off 0.1% yearly but up 15% in five years. High? 8.8% in January 2022.
Off 1.6% yearly but up 15% in five years. High? 11% in November 2022.
Bottom line
Ponder one last CPI food niche what s arguably California s food-flation bargain.
In a season that calls for celebration, prices are tumbling for alcoholic beverages. Costs are down 13% in a year for name-your-poison: booze, beer or burgundy?
Yes, alcohol is still 15% pricier than five years ago. But these drinks are in a steep reverse, with prices down from peak inflation of 17% in September 2023.
So, cheers to a dash of good inflation news!
Postscript
Rising labor costs are a significant chunk of food-flation especially dining out.
At the same time, widespread pay hikes across California counter some of inflation s pain.
The statewide average weekly wages grew by 31% in the five years ended in March, according to a federal pay gauge. That beat food-flation s 27% surge since 2019.
Well, just like food costs haven t moved in sync across spending categories, wage growth isn t uniform.
For example, the 33% wage hikes over 5 years handed out in California s service industries beat food-flation. Goods producers didn t keep pace, though, up only 26%.
Three key industries also trailed natural resources wages rose 18%, education and health services were up 23%, and construction increased 23%.
And geographically speaking, raises in 23 of California s 58 counties did not top food-flation.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached [email protected]
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