4 reasons groceries are getting more expensive

Grocery bills could rise another 3% this year, says the U.S. Department of Agriculture (USDA), and some experts say the price escalation won’t end there.

“I think food prices are going to continue to increase for probably a good year, year and a half,” predicts Phil Lempert, founder of SupermarketGuru.com. Here are four reasons U.S. food prices are likely to keep going up.

1. Plummeting food production

Food production, because it so often involves crowded working conditions, was decimated last year, both by COVID-19 shutdowns and a number of outbreaks at packing plants across the U.S.

The lack of product triggered a sharp increase in meat prices. BLS data shows consumer spending on meat increased 5.5% from January 2020 to January of this year.

Many processing plants are now required to invest in technology and new processes to keep their workers safe, including more automation and equipment that can be operated remotely.

Guess who will be absorbing the additional cost.

Tip: One way to offset your higher food bills is by cutting your other expenses — like the pricey interest on your credit card debt. You might tame those costs by rolling your balances into a lower-interest debt consolidation loan.

2. Transportation tumult

The pandemic also knocked food distribution off track, adding to the price pressures. The United Nations Conference on Trade and Development found that global shipping dropped for the first time in 11 years during 2020.

International shipping is key to keeping America’s grocers well-stocked. The Food and Drug Administration says the U.S. imports 15% of its overall food supply, often from distant locales including China, Italy and France. And according to one estimate, we import as much as 65% of our seafood from international producers.

Another transportation-related factor in rising food costs is the rapid increase in oil and gas prices. As many Americans decided it was safe to leave their homes again, demand for gasoline bounced back faster than oil producers could increase production.

Tip: You can hold down the cost of driving — and balance out the increases in food prices — by finding a better deal on your car insurance. Get rate quotes from several insurers, and you're likely to find you can pay less for your coverage, possibly by hundreds of dollars a year.

3. More eating at home

Remember when eating at home seemed like a can’t-miss way to save a few bucks on food every week?

Ironically, eating more frequently at home is one of the reasons we’re paying more for groceries — and scrambling to find creative ways to save and make more money.

With so many families at home for three meals a day, food consumption in the U.S. has exploded. A recent article in the journal Agribusiness reported that half the participants in a food consumption survey said they'd been buying more groceries than usual during the pandemic, with 33% admitting to stockpiling it.

A few million people eating a few extra lunches at home every week takes a monstrous bite out of the U.S. food supply. As food gets more scarce, there’s really only one direction prices can go.

Tip: One easy way to give yourself a regular discount at the grocery store is by using an app that rewards you with cash back. The app Fetch, for example, lets you earn points and rewards just for snapping a photo of your receipt.

4. Wild weather

Extreme weather has hammered the global supply chain. Just look at the winter storms that crippled Texas — and destroyed crops and livestock and badly disrupted food distribution in the Lone Star State.

Texas Agriculture Commissioner Sid Miller told multiple media outlets that dairies were forced to dump 14 million gallons of milk during the crisis.

Texas A&M’s AgriLife Extension Service estimates that the state’s farmers and ranchers lost $600 million and predicts the ultimate result will be food shortages and higher prices around the country.