Beef Prices Surge Most In A Decade As Food Inflation Soars

Tyler Durden's picture

Just a month ago we warned that food inflation was on its way. Today we got the first confirmation that problems are on their way. While headline data washes away the nuance of what eating, sleeping, energy-using human-beings are paying month-in and month-out, the fact, as WSJ reports, that beef prices surged by almost 5% in February - the biggest change since Nov 2003 - means pinching consumers and companies pocketbooks that are still grappling with a sluggish economic recovery. "Things are definitely more expensive," exclaimed on mother of three, "I can't believe how much milk is. Chicken is crazy right now, and beef - I paid $5 a pound for beef!" Just don't tell the Fed!

Via WSJ,


Of course, it's not just beef...

...prices also are higher for fruits, vegetables, sugar and beverages, according to government data. In futures markets, coffee prices have soared so far this year more than 70%, hogs are up 42% on disease concerns and cocoa has climbed 12% on rising demand, particularly from emerging markets.





Food prices have gained 2.8%, on average, for the past 10 years, outpacing the increase in prices for all goods, which rose 2.4%, according to the government.




Still, the price increases pose a challenge for food makers, restaurants and retailers, which must decide how much of the costs they can pass along and still retain customers at a time of intense competition and thin profit margins. During previous inflationary periods, food makers switched to less-expensive ingredients or reduced package sizes to maintain their profit margins. Retailers and restaurants usually raise prices as a last resort.




In California, the biggest U.S. producer of agricultural products, about 95% of the state is suffering from drought conditions, according to data from the U.S. Drought Monitor. This has led to water shortages that are hampering crop and livestock production.


U.S. fresh-vegetable prices that jumped 4.7% last year are forecast to rise as much as 3% this year, while fruit that gained 2% last year will rise up to 3.5% in 2014, according to the USDA.

But, as The Wall Street Journal notes, there are more consequences:

Food-price increases are a particularly touchy issue for emerging markets, where spending on food accounts for a higher share of monthly budgets than in wealthier countries.


In 2008, a spike in food prices caused riots from Haiti to sub-Saharan Africa and South Asia. Three years later, in 2011, rising food prices were a factor behind the Arab Spring protests in North Africa and the Middle East that ultimately toppled governments in Tunisia and Egypt.


The increase in global prices last month surprised some economists, and raised the specter of more severe increases that could hit the world's poorest countries, economists said.


And it's set to get worse:

"To be honest, until a month ago, our feeling and thinking was that most markets were well-supplied," said John Baffes, a senior economist at the World Bank. "Now, the question is: Are those adverse weather conditions going to get worse? If they do, then indeed, we may see more food price increases."


Drought, harsh winter seen fueling higher food prices, Chris Christopher, economist at IHS Global, writes in client note.


Consumers may face “surge ahead”

Just don't tell the Fed - or they mighy just take the punchbowl away...

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TheMeatTrapper's picture

I trap my meat supply - and get paid to do it. To hell with factory fed, steroid injected, growth hormone laced, antibiotic soaked "meat". My freezer is full.

Learn to Trap Your Food



TahoeBilly2012's picture

$4.99 for Eel River Organic coastal here in town...I can't even explain how damn good it is and the prices seems very low for how amazing it is. 

AlaricBalth's picture

The Bureau of Labor Statistics states that consumers can and do, to some degree, insulate themselves from the impact of higher prices by adjusting their spending to favor relatively lower-priced goods or services. This is known as the substitution effect, and it is one of the hedonic methods the BLS uses to understate inflation.

What the BLS fails to take into consideration is the fact that a large portion of the populace has "substituted" their food choices down to the lowest quality and there isn't much left to substitute. What do they expect people to eat when even the lowest quality food prices begin to skyrocket.

I haven't had a good mud pie since I was six, but I guess that's next.

King_Julian's picture

"What do they expect people to eat..."

i-Pads, of course!

National Blessing's picture

Inflation?  Get real.  I just ain't seeing it.  Bitches.

johnQpublic's picture

53 bucks for a 14oz grass fed dry aged new york strip

worth every penny

clooney_art's picture

It's about time to change and not discriminate.

Horse, Zebra, Giraffe, Hippo meat should replace the high cost of beef.

old naughty's picture

What about not eating meat?

No way?

Ok, forget I asked.

wallstreetaposteriori's picture

let them eat all those worthless bitcoins.... good thing about higher food costs though... the obesity rate should fall off a cliff for poor people as they starve.  I guess BHO can parade around and pat himself on the back as he gives all the credit to O-care.

Its_the_economy_stupid's picture

7 weeks and flogging the blog? Crap I didn't even comment till I followed for 7 months. Always was a late bloomer.


Obese-Redneck's picture

Here in the Deep South , it's pushing 5.99. While Mrs. O-R is pushin' 425. And I don' mean per poun' I mean she IS 420 pounds lord bless every ounce.

Rafferty's picture

Wait till Latoya and the rest of the Free Shit Army get hit by this.  batten down the hatches!

Independent's picture

At least they got mud (which meand water is around) some places don't have any mud period only sand.  Also why arent they fishing they are on a freakin huge island surrounded by water

FreeMktFisherMN's picture

Hedonics is complete hogwash and immoral. To gauge an effect of inflation--rising prices--one has to see what happens to the SAME commodity or whatever. I want prices to be FALLING over time, not even 'stable'. If there is great productivity in crops or whatever, and prices are 'stable' but if it was sound money would have fallen by a sizable amount, then one has to take into account that opportunity cost/what would have been. Prices should fall over time. Priced in gold things do, in fact. Obviously supply/demand of commodities due to weather, geopolitical situations, etc. fluctuates, but priced in terms of sound money things go down or at least stay relatively stable.

What matters is the relative move. Don't just go off the accounting method because it doesn't take into effect what should have been the price had the dollar been sound. And even the accounting measure is BS as prices are rising a lot more than they say, and again, that doesn't take into account the 'what should have been' factor if say a huge surplus crop but prices still rose 2%, instead of falling by 7%. 2% accounting but 9% in reality (reflects the malinvestment as well).

Its_the_economy_stupid's picture

A buddy worked for a company that tracked supermarket prices. He would walk into a store and w a handheld device price every single itme for sale. Every one. Then the company would sell  the data to competing stores. Why would a store allow him to price their wares? Cause they were buy the same data from the same company pricing others stores and it was part of the contract ot allow pricers in their store as well.

How does the FED get their data.

 They "call around and ask on the phone". No, you can't make this s--- up.

RabbitChow's picture

Well, like the inimitable Alan Greenspan once said, the gummint can guarantee the payment of dollars in terms of social security checks and all the other payments that are required, but they will never be able to guarantee the purchainsg power of those dollars.

What you see coming is the perfect storm, where shortages push prices up, and repudiation of Treasuries will further erode the dollar into hyperinflationary mode.  It may be too late to defend the normalcy bias.

RabbitChow's picture

Well, like the inimitable Alan Greenspan once said, the gummint can guarantee the payment of dollars in terms of social security checks and all the other payments that are required, but they will never be able to guarantee the purchainsg power of those dollars.

What you see coming is the perfect storm, where shortages push prices up, and repudiation of Treasuries will further erode the dollar into hyperinflationary mode.  It may be too late to defend the normalcy bias.

LetThemEatRand's picture

By and large, better than organic beef, and lower fat while tasting just as good or better.

Rock On Roger's picture

Alberta bison - pure meat.

prains's picture

...and only 10 minutes away at Elk Island Park. However they're generally less cooperative when I bring out the BBQ. I think they sense somtings up!

Independent's picture

Humans, the other white meat, and since they eat a lot of chicken you can be sure they TASTE LIKE CHICKEN when the time comes and you have to Trap your Fellow Survivors LOL. Just ask the guys that served up Rockerfeller in Papua New Guinea

Rock On Roger's picture

Sum Ting Wong

They are cunning beasts, they certainly know when my family is getting hungry.

My bison don't seem to like it when I show up with a long stick in my hands.

Much wiser than a sheep.


Long Live Allison - HeHeHe ;-)

Fucking Bilderburger.


Stack On

bankerbackbacon's picture

Good luck with the CJD slow onset brain omlet.

Kissingers "soft kill".. Its more than just a British problem, its global.

Cthonic's picture

Also transmissible via iatrogenic routes like transfusion and surgery.  At one point didn't they block Brits from donating blood?

Independent's picture

To think some people were even arguing with us about Inflation even existing.  Here's the BEEF now suckers.

Buck Johnson's picture

They can't hide the inflation anymore with smaller packages anymore.  It's coming at full tilt because all that money we printed is finally hitting our shores like a tsunami.

Renewable Life's picture

People haven't seen shit yet!!!!

Wait until people realize all the cheap food they bought from Cali isn't coming East his year? No water, no food, I saw a 200 cattle car long train, go by this week, moving east, filled with cattle, that don't have water and are going to slaughter or moving east!!

People say so what, well those cattle should be being breed and instead are being slaughtered because no water AND prices are so fucking high, the farmers are cashing in!! No breeding, no future cattle, no water, the cycle is broken, prices spike and cattle stocks continue to spiral downward, bye bye red meat for the average American!!!!

It could take decades to bring this back into balance, if ever, depending on how bad it gets!

Hmmmmm's picture

Sold a 100+ heifers and steers last month and couldn't be happier unless I'd been paid in Au.

quasimodo's picture

The old man is feeling the same way after selling 83 head back a few, about buying it in the store, a different story.

We just set one aside when needed, raise it on a mostly grass fed diet and little corn toward the end to finish, no drugs ever...makes for some mighty fine natural beef. Not organic but it's the next best thing.

Scottish Highland makes for some really healthy and tasty meat as well, but they are some shaggy creatures.

Waterfallsparkles's picture

People may just live longer without eating beef or much less of it.  This is bad for the Government as they will have to pay Social Security longer.  Also, bad for the Medical establishment as more people may not get Cancer.

tmosley's picture

Why trap meat when you can just eat Soylent?

OldPhart's picture

No change in the CPI as food isn't counted anyway.  And Spam has always been a substitute for T-bones since 'forever'.

Offthebeach's picture

More NSA/Google game apps are free, so that compensates.

you can't fix stupid's picture

$3.49/lb for freshly ground beef and $7.99 for Prime Grade NY Strips. Guess there is no inflation in Texas.

slightlyskeptical's picture

$3.99 /lb advertised here in Palm Beach. You have to buy 20 lbs. but I think steaks are better AFTER BEING THAWED OUT. The two other stores i shop have sales for 5.99 and 7.99 this week on the same. Ground beef is actually more than $3.99. HMMM...beter checks those steaks carefully.

RabbitChow's picture

$2.41 per pound, hanging weight, sides, cut anyway you want, from a farmer friend in Bedford County, PA.  Registered PA dept of Agriculture grass fed Angus.  95+% lean, very tender.

Seize Mars's picture

Food inflation: or as I like to call it, "inflation."

NOZZLE's picture

Its okay the contents of the pachage are smaller but the cows are bigger than they were 50 years ago.

FreeMktFisherMN's picture

they'll talk about supply/demand idiosyncrasies like weather and whatnot, but what are commodties paid with? And what is happening to the supply of what they are being paid with?

FieldingMellish's picture

My neighbor just raised the price of his beef today to $5.50 a pound. Good thing I can hedonically substitute... here, kitty, kitty, kitty!

Independent's picture

YOU BASTARD!!  Just for the record I slept around a lot and have foot and mouth disease and a heavy parasite burden, just like America LOL.  Also by the way I am from the California and Oregon coast and have been having a metallic taste in my mouth last few months.

sangell's picture

SNAP EBT cards are computed using hedonically adjusted prices. Rat, cat and dog meat can replace chicken, pork and beef.