Grocery prices are soaring. Here’s why

The higher prices that food makers have been warning about for months have hit U.S. grocery carts.

Seafood prices are up 18.7%, on average, in the 13-week period that ended April 24, while baked goods such as doughnuts and rolls cost about 7.5% more than in the same period last year, new data from NielsenIQ show. In fact, 50 of the 52 categories tracked by the data provider are more expensive than a year ago, with only butter and milk holding essentially flat while everything around them skyrockets.

Rising commodity costs are partially behind the surging prices, with the Bloomberg Commodity Spot Index — which tracks 23 raw materials — now at its highest level in almost a decade. Surging transport costs and supply chain disruptions are contributing, too, as is a continued bump in consumer demand as more Americans cook at home.

“Everyone is looking to offset higher transportation costs, higher labor costs and higher input costs. And that flows through the whole chain all the way to the consumer,” said Bloomberg Intelligence analyst Jennifer Bartashus. “Inflation expectations for 2021 are much higher than they’ve been in recent years.”

With demand so elevated during the pandemic, grocers have not had to discount as many items as they normally would have, said the chief executive of Albertsons Cos., which operates 2,277 supermarkets including chains such as Safeway and Vons.

“When there’s a shortage in supply, it makes no sense to promote aggressively,” Vivek Sankaran said in an interview last month. “That’s why you see inflation in some categories. It just makes no sense to play with price at this point.”

These higher food prices come at a time when U.S. gasoline prices are also rising, pinching consumers.