Thanksgiving Day, an annual national holiday in the US, began as a way to celebrate the harvest and other blessings of the past year. Nowadays people celebrate the holiday with massive feasts and watch football. But one thing consumers won't be giving thanks to this year is soaring food inflation that could make Thanksgiving 2021 one of the most expensive on record.
"When you go to the grocery store and it feels more expensive, that's because it is," Veronica Nigh, senior economist at the American Farm Bureau Federation, told CBS News. She said food prices in 2021 jumped 3.7% versus a 20-year average of 2.4%. Turkeys and all the trimmings will cost 4% to 5% more this year than a year ago.
Rising food prices have been an ongoing issue since the beginning of the pandemic, as disrupted supply chains and adverse weather conditions around the world have made supplies of crops dwindle. Global food prices are at fresh decade highs and have begun to hit the wallets of consumers.
September's Consumer Price Index for food was up 4.6% from a year ago. Prices for meat, poultry, fish, and eggs were up the most, soaring more than 10%. The rise in food prices has spooked the Biden administration.
Several factors contribute to food inflation, including supply chain snarls, higher transportation costs, and labor shortages. Next year, food inflation may rise further as fertilizer prices jump.
"Agriculture is like everybody else — it's impacted by the supply restraints we've seen," Nigh said. She said 10% of food costs only come from farming, while the rest (90%) are trucking, wages, distribution, and warehousing.
Besides soaring food costs, consumers may experience widespread supply chain challenges that could make certain food items critical for Turkey Day harder or impossible to find because of shortages. Dr. Krishnakumar S. Davey, president of IRI Client Engagement, published a note explaining IRI's basket of availability, demand, price, and promotion for Thanksgiving is "recording significant out-of-stock rates on several Thanksgiving-related grocery categories at this time."
According to Consumer Reports, there is some good news: "turkeys in all sizes will be in abundance."
But there's a dark side to Thanksgiving this year, that is, an income-inequality story which means the top 10% of Americans will be spending more while the working-poor might skip the holiday entirely due to affordability issues.