Historic inflation caused by a 'perfect storm' of factors, says Chicago-based expert
CHICAGO (CBS) -- Economists are cautiously optimistic about inflation as national numbers out this week indicate prices are dropping.
The average cost for a gallon of gas is down almost 70 cents in the last month but the same cannot be said for some popular foods.
Morning Insider Lauren Victory takes us inside still-soaring prices at the grocery store.
Chicagoan Ron Gresham might need to part with some of his prized possessions. CBS 2 introduced you to the award-winning sound engineer last week who said he can't afford his storage unit with the price of everything else on the rise.
"The green beans was 87 cents a can. Now, they're a $1.96 a can ," Gresham said in our previous story that highlighted the impact of inflation.
Say Gresham's grocery trip set him back $100 last summer. Thanks to food inflation, analysts say the same basket would cost an additional $14 now plus tax.
"It's [the cause of inflation] a tsunami. A perfect storm of various factors," said Krishnakumar Davey, president of client engagement at IRI, a Chicago-based strategic analytics firm. Davey studies consumer spending and says the cost of grocery products really began to take off when the war in Ukraine began this winter and commodities took a hit.
Overall, IRI found prices for food rose 14.4% between July 2021 and July 2022 with prices in many aisles continuing to climb between June and July of this year. You can follow along using the company "Inflation Tracker."
Compared to last summer, the bill for frozen dinners and entrees cost 22.8% more and the price tag on butter and margarine is up 26.3%. Frozen pizza is setting consumers back an extra 17.8%.
"Even during the great recession in 2008, we actually had quite a bit of a price increase but they really didn't go into double digits," said Davey.
The most eye-popping increase: an almost 50% jump on a carton of eggs.
"Avian flu and the bird flu that recently happened a few months ago. That has driven supply shortages in terms of birds," explained Davey.
Drought in some parts of the world is affecting prices of other goods. More coronavirus shutdowns in China took a toll as well.
CBS2 asked Davey if he has any predictions for grocery store prices in the next six months to a year.
"We expect more moderate inflation in a six-month to a year time frame," said Davey. "In 2023, we expect it to moderate, to come down, to more palatable 3 to 5% price increases.
Analysts say consumers seem to be backing off from treating themselves to premium products now that inflation is taking a bite out of their spending power. Davey calls it "trading down." For many, inflation is prompting a return to bargain hunting and coupon clipping for many shoppers.
One thing Americans are not skimping on -- beer. Sales of premium and super premium imported beer are up 2.6% compared to the same time last year, according to IRI data.
