There's No Hiding From Higher Grocery Bills — But There's One Solution

Written by Jason Simpkins
Posted December 10, 2021

Across the country, Americans are feeling the biting sting of inflation.

But while prices have been rising across the board, the most painful pinch of all has come from towering grocery bills.

The official data says grocery prices increased 3.7% in 2020, and are now up 5.4% in the past year.

But in truth that's underselling it.

Not just because the government figures are wrong — but because mild price increases in certain items tend to obscure the more obscene jumps in food staples.

For example, eggs are 11.6% more expensive than they were a year ago, chicken costs 8.8% more, cereal is up 5%, and baby food prices have grown 7.9% annually.

And if you're someone who likes their beef, steak has seen the highest price jump of all, climbing 24.9%.

Now, if like me, you've been struggling to swallow these massive price hikes, I'm sorry to inform you that it's going to get worse.

Big manufacturers of household names like Kraft Heinz, Mondelez, Procter & Gamble, and Tyson Foods say they plan to hike prices even higher on everything from snacks to toiletries to meat and more in early 2022.

"We've been increasing prices, and we plan to increase prices more than we've done... for quite a while as a company," Mondelez CEO Dirk Van de Put said on an earnings call with analysts last week. Mondelez makes brands such as Oreo and Chips Ahoy. Van de Put said a 6% to 7% price increase will take effect on its U.S. products in January.

On the whole, market research firm IRI projects that prices for food, beverages, and household basics will surge another 8% during the first half of 2022.

Sounds like a real treat.

But now here's something you may not know...

It's not just Americans that are suffering.

In Russia, potato prices have risen 79% over the last 12 months.

As a result, Olivier salad — a traditional dish akin to potato salad — costs 15% more to make this year.

Another popular Russian meal, herring under a fur coat (pickled herring layered under vegetables and topped with beetroot), costs 25% more.

And caviar, the country's best-known delicacy, is now at a record high.

Things have gotten so bad that Russia has had to hike its export tax on wheat in a desperate bid to keep supplies at home. 

Meanwhile, in China, fresh vegetable prices climbed 30.6% from this time last year.

And pork, the country's most popular meat product, is up 12.2%.

Indeed, according to the United Nations Food and Agriculture Organization (FAO), global food prices rose 1.2% from October to November, and are now at their highest level since June 2011.

Okay, well, 1.2% doesn't sound too bad, right?

Well, no, but then if you adjust for inflation, you find that what that really means is that food prices are at their highest level in 46 years. 

Global Food Prices UN

You'd have to go back to the 1970s when a trade deal gone awry (the fabled Great Grain Robbery) caused global food prices to surge 30%.

Now, there are a number of reasons for all of this.

Food prices can be affected by any number of variables — floods, fires, poor harvests... you name it.

Just for example, drought and heat in the United States caused a 40% decline in the spring wheat crop in 2021, and a 10% decline in the total wheat crop.

And in another sad and grim turn, floods in China drowned at least 200,000 chickens and up to 6,000 pigs this past summer.

Of course, those are random — and dare I say "transitory" — events, whereas some catalysts have been more persistent. 

By that I mean global fertilizer prices have increased 80% this year, reaching their highest levels since the 2008 financial crisis.

And long-term fertilizer shortages threaten to reduce grain harvests further into 2022, exacerbating a vast swath of food price increases.

Interestingly, Outsider Club commodities expert Luke Burgess recently told me that the real factor behind the fertilizer crisis can actually be narrowed down to one single mineral.

And he actually has a stock pick poised to surge based on the global race to acquire it.

So if rather than bemoaning the rapid rise in food prices you'd like to get some of your money back from it, you should check out his report here.

Other than that I'm afraid there's not much more we can do.

Belts across the country are going to continue to tighten both figuratively and literally in the years ahead.

Fight on,

Jason Simpkins Signature

Jason Simpkins

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Jason Simpkins is Assistant Managing Editor of the Outsider Club and Investment Director of Wall Street's Proving Ground, a financial advisory focused on security companies and defense contractors. For more on Jason, check out his editor's page. 

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