Prices have risen steadily in Russia since the beginning of the full-scale invasion in Ukraine [BBC]
“Life is becoming more expensive,” complains Alexander, a Moscow-based advertising specialist who works for a big corporation.
In the course of one month his monthly food budget soared by more than 22% – from 35,000 roubles (£330; $450) to 43,000 (£406; $555).
With Russia’s economy hanging somewhere between stagnation and decline, ordinary Russians have begun to feel the pinch from the Kremlin’s war on Ukraine, as it approaches its fourth anniversary.
The cost of almost all essentials has gone up in local supermarkets, from eggs and chicken fillets to seasonal vegetables, Alexander has noticed. We have changed the names of everyone we have spoken to for this piece.
Even his daily treat on the way to work – an Americano from a local cafe – has suddenly surged 26% from 230 to 290 roubles.
Russians have noticed a sharp increase in food prices since the start of the year [Getty Images]
Prices have risen steadily in Russia since the beginning of the full-scale invasion in Ukraine, driven by a federal budget dominated by the war effort and defence industry.
This in turn has led to rapid economic growth and raised living standards across the country.
Until now, high levels of inflation have gone largely unnoticed by the general population, especially in the big cities such as Moscow and St Petersburg. Big spending masked the mounting economic consequences of the war, as well as Western sanctions and the exodus of foreign investment from Russia.
That rapid economic growth slowed sharply in 2025, and as salaries could no longer keep up with inflation, rising prices started to hit people’s pockets.
Then at the start of 2026, supermarket prices jumped by a sharp 2.3% in less than a month, according to data from Russia’s statistics service Rosstat.
Everything became more expensive at the start of the year: meat, milk, salt, flour, potatoes, pasta, bananas, soap, toothpaste, socks, laundry detergent, and many medicines too.
Every other January since 2019, the BBC has bought the same selection of 59 basic goods from the same supermarket chain, Pyaterochka, in Moscow. The basket includes vegetables and fruits, dairy and meat products, canned goods and instant noodles, sweets and beverages, including beer.
In 2024, the basket cost 7,358 roubles (£63; $83). Last month, it cost 8,724 (£83; $112) roubles – an increase of 18.6%.
That tallies with Rosstat’s own 18.1% measure of overall accumulated food inflation from January 2024 to the end of January 2026.
One of the most noticeable price increases in our basket has been a hike of almost 15% in the cost of fruit and vegetables since 2024.
Russia relies on imported fruit and vegetables, so store prices are highly sensitive to fluctuations in the rouble exchange rate and disruptions in the supply chain. Both occurred after the beginning of the war in Ukraine.
At the same time, the price of dairy products – which tend to be locally produced – has soared 41%, the biggest rise in our sample basket in the last two years. This is because Russia’s dairy industry has been hit by rising farm costs, expensive loans and staff shortages.
The most recent factor influencing price rises is a two-point increase in VAT from 20% to 22% since 1 January.
The sales tax hike is directly related to the war in Ukraine, as Russia’s finance ministry said it was needed to finance the country’s “defence and security”.
Dairy products have seen the biggest price surge in BBC’s basket in the last two years [Getty Images]
While Alexander from Moscow told the BBC he was not going to change his eating habits, others say rising food prices have hit their diets and family budgets significantly.
Nadezhda, 68, says she can no longer afford to buy beef and has resorted to cheap varieties of fish.
She and her husband, who are both retired, live in Moscow on their state pensions and his additional income. Nadezhda says her entire monthly pension of almost 32,000 roubles (£302; $413) now goes on food.
That means other expenses have been put on hold.
They had been saving to fix their car, but recently had to rely on savings to pay for food. Similarly, buying a new winter jacket for Nadezhda’s husband, which would have cost about 17,000 roubles (£160; $220), will have to wait until next year.
Kristina, a Moscow marketing specialist in her mid-40s, also had dig into her savings to buy food last month. She lives with her husband, who is a personal trainer, and says she has started paying attention to discounts and has noticed others in supermarkets doing so as well.
“Now I take a very pragmatic approach: not what I want or don’t want to eat, but how much protein is in 100 grams of this product,” Kristina says.
She and her husband can no longer afford to eat out, but even when cooking at home, the price of a dinner for two has more than doubled – from around 1,000 roubles (£9.46; $12.92) to more than 2,000 roubles (£18.91; $25.85).
In summer 2025, Russia’s Central Bank Governor Elvira Nabiullina said that the economy was close to a “scenario of balanced rates of economic growth”.
However, some economists suggest that after slowing down significantly last year, the Russian economy is now at risk of going into the red.
One of the main risks this year will come from the oil market.
The federal budget is based on a high oil price, but market rates have fallen since the start of this year and there is no expectation of any imminent rise.
Russian oil sales have also been hit by latest US sanctions that have cut off supplies to one of Moscow’s main trading partners, India.
As a result, Russian authorities are likely to face a bigger budget deficit than they had planned.
Despite Russian President Vladimir Putin paying a visit to India in December last year, India’s Russian crude imports have fallen since the beginning of 2026 under pressure from US [Getty Images]
Borrowing is difficult due to high interest rates – few are willing to lend to a country currently waging war and with a reputation for being unreliable.
That could mean further unpopular measures – either further tax rises, which would hurt people and businesses, or cutting budget spending, primarily in the public sector. That would slow down the economy and bring down household incomes further.
“Overall, there is a trend towards stagnation and a possible decline in GDP,” Tatiana Mikhailova, an economist and visiting assistant professor at Penn State University, told the BBC.
For the moment nothing indicates the economy is in decline, but she believes there is a high likelihood of it happening.
“Every time oil prices fall, a recession is possible in Russia,” she says, even if she believes the economy can carry on without growth for some time.
That may be of little comfort to ordinary Russians, who will still feel the effects in their pockets.
(CNN) — Millions of tons of food are wasted each year in the United States alone.
About 35 million tons, to be specific, according to the latest ReFED report. Some 31% of food that is grown and produced goes unsold or uneaten in the US, estimates ReFED, a nonprofit organization focused on reducing food waste.
Half of all the food waste comes from consumers. “That’s either groceries — the strawberries that spoil in your fridge — or the meal you ordered at the restaurant and only hate half of or didn’t eat the leftovers when you brought them home,” said Sara Burnett, executive director of ReFED.
That waste wreaks havoc on our planet, she said, noting that 35 million tons of food waste “is equivalent to the greenhouse gas emission of 154 million metric tons of carbon, which is about the same as driving 36 million passenger cars for a year, and it consumes 9 trillion gallons of water, which is about 13 million Olympic-sized pools.”
On Thanksgiving alone, ReFED estimated that 320 million pounds of food— $550 million worth— will be thrown away in a single day.
The amount of waste is not decreasing even as inflation and food prices rise, according to Burnett, and the cost of being wasteful goes up.
We owe it to our wallets and to the planet to do our darndest to reduce any possible waste. Luckily, there are plenty of ways to preserve fresh ingredients for long-term consumption — by drying, freezing, canning, pickling, baking and repurposing them.
“When I was first learning to cook, if a recipe told me to cut off and discard a kale stem, I did it. I didn’t know it was edible, and I didn’t know about the impacts of wasting food,” said Lindsay-Jean Hard, a writer for gourmet food business group Zingerman’s and author of “Cooking With Scraps: Turn Your Peels, Cores, Rinds, and Stems Into Delicious Meals.”
“Education is a huge piece: questioning our assumptions, educating ourselves, and then sharing that knowledge with others so we can all do a little better,” she noted.
Here are some useful ways to stop wasting food.
Have a food plan
Chef Michele Casadei Massari suggested implementing simple systems at home that work for you such as an “opportunity box” in the fridge, containing “trimmed, labeled bits ready to become soup, salad, or frittata.”
“Buy less but more often, store correctly, pre-portion, and give every item a ‘next-life plan’ the day it arrives,” Massari, CEO and executive chef of Lucciola Italian Restaurant in Manhattan, said via email.
Hard takes those scraps and tucks them into frittatas and stratas.
“Both are great back-pocket recipes, (which means) they’re easy to pull together… and can handle all sorts of odds and ends.”
Food scraps can be tucked into savory dishes such as this spinach mushroom frittata. Credit: tvirbickis/iStockphoto / Getty Images via CNN Newsource
Her advice for diving deeper into zero-waste cooking is to pick one or two ingredients you are not used to using, maybe stale bread or root vegetable greens, and start incorporating them in your cooking — then add more as you go. (Remember bits of bread can be frozen for other recipes, and vegetables can be pickled or frozen for stock.)
“Many home cooks are already really thoughtful about food utilization, whether from necessity, growing up around it, or being taught. Others of us might not be yet,” she said. But we can get there.
Don’t rinse your jars
Claire Dinhut, a content creator and author of “The Condiment Book: Unlocking Maximum Flavor With Minimal Effort,” is a big proponent of using every last bit of flavor in any jarred or bottled product you have on hand. She demonstrates this strategy in her “never rinse a jar” videos that she posts on social media.
A nearly used up jar of Dijon mustard or mayonnaise is the perfect opportunity to make a salad dressing, she shows in the videos, and an almost empty jam jar can become the perfect vessel for a yogurt bowl, a chia seed pudding and much more.
“My favorite thing that I’ve been doing this summer is — you know, I’ve always loved matcha, but I didn’t realize that I liked different flavored ones,” Dinhut said. “So now, anytime I’m done with a jar of jam or jelly, I always put milk in it the night before, then the next morning, I already have a nice, flavored milk.”
Don’t peel those carrots
It’s important to question any recipe and our ideas around the usable parts of each ingredient. Who says you need to peel potatoes or carrots?
“Having a sense of curiosity and questioning your habits — do you really need to peel that carrot? — is a helpful frame of mind to go into it with,” Hard said.
Scraps can even act as flavor enhancers of their own, as in the case of a banana bread recipe from Zingerman’s Bakehouse, an artisanal bakery in Ann Arbor, Michigan, that uses the whole banana, peel included, Hard said.
“Not only does it reduce food waste, including the peel gives the bread a stronger banana flavor, but it’s a great example of something that truly does taste better made with ‘scraps,’” she added.
You can find the Oh So A-peel-ing Banana Bread recipe in “Celebrate Every Day,” a Zingerman’s cookbook that Hard coauthored. A version of the recipe is also available here.
(CNN) — President Donald Trump on Friday signed an executive order that retroactively lowers tariffs on beef, tomatoes, coffee and bananas, among other agricultural imports, backdated to Thursday.
The order Trump signed excludes the goods from “reciprocal” tariff rates, which start at 10% and go as high as 50%. However, the order doesn’t exempt the goods entirely from tariffs.
For instance, tomatoes from Mexico, a major supplier to the United States, will continue to be tariffed at 17%. That rate took effect in July after a nearly three-decade-old trade agreement expired. Tomato prices increased almost immediately after those tariffs were put in place.
Many of the commodities that will no longer face “reciprocal” tariffs have seen some of the biggest price increases since Trump took office, in part because of tariffs he imposed and a lack of sufficient domestic supply.
For instance, Brazil, the top supplier of coffee to the US, has faced tariffs of 50% since August. Consumers paid nearly 20% more for coffee in September compared to the prior year, according to Consumer Price Index data.
The move comes after voters expressed frustrations with the state of the economy in exit polls earlier this month, voting for Democrats in off-year elections in several states.
In previewing Friday’s executive order, Treasury Secretary Scott Bessent said earlier this week the moves targeted goods “we don’t grow here in the United States,” referring to coffee and bananas. (While coffee is grown in some parts of the country, it’s mostly imported.)
Earlier on Friday the Trump administration and the Swiss government announced a new trade framework that calls for lowering tariffs on goods from Switzerland to 15% from 39%, a rate that was among the highest across all countries the US trades with.
This story has been updated with additional context and developments.
What was the worst moment for the American economy in the past half century? You might think it was the last wheezing months of the 1970s, when oil prices more than doubled, inflation reached double digits, and the U.S. sank into its second recession of the decade. Or the 2008 financial collapse and Great Recession. Or perhaps it was when COVID hit and millions of people abruptly lost their job. All good guesses—and all wrong, if surveys of the American public are to be believed. According to the University of Michigan Surveys of Consumers, the most widely cited measure of consumer sentiment, that moment was actually June 2022.
Inflation hit 9 percent that month, and no one knew if it would go higher still. A recession seemed imminent. Objectively, it’s hard to claim that the economy was in worse shape that month than it had been at those other cataclysmic times. But substantial pessimism was nonetheless explicable.
Over the next 18 months, however, the economy improved rapidly, and in nearly every way: Inflation plummeted to near its pre-pandemic level, unemployment reached historic lows, GDP boomed, and wages rose. The turnaround, by most standard economic measures, was unprecedented. Yet the American people continued to give the economy the kind of approval ratings traditionally reserved for used-car salesmen. Last June, the White House launched a campaign to celebrate “Bidenomics”—the administration’s strong job-creation record and big investments in manufacturing and clean energy. The effort flopped so badly that, within months, Democrats were begging the president to abandon it altogether.
More recently, consumer sentiment has improved. After falling for months, it suddenly rebounded in December and January, posting its largest two-month gain in more than 30 years—even though the economy itself barely changed at all. Yet as of this writing, sentiment remains low by historical standards—nothing like the sunny outlook that prevailed before the pandemic.
What’s going on? The question involves the psychology of money—and of politics. Its answer will shape the outcome of the presidential election in November.
The toll of inflation on the American psyche is undoubtedly part of the story. That people hate high inflation is not a novel observation: The Federal Reserve has long been obsessed with preventing another ’70s-style inflationary spiral; its patron saint is Paul Volcker, the former Fed chair who famously broke that spiral by jacking up interest rates, which plunged the economy into a recession. But although experts and political leaders know that inflation matters, the way they understand the phenomenon is very different from how ordinary people experience it—and that alone may explain why sentiment stayed low for so long, and has only now begun to rise.
When economists talk about inflation, they are often referring to an index of prices meant to represent the goods and services a typical household buys in a year. Each item in the index is weighted by how much is spent on it annually. So, for instance, because the average household spends about a third of its income on housing, the price of housing (an amalgam of rents and home prices) determines a third of the inflation rate. But the goods that people spend the most money on tend to be quite different from those that they pay the most attention to. Consumers are reminded of the price of food every time they visit a supermarket or restaurant, and the price of gas is plastered in giant numbers on every street corner. Also, the purchase of these items can’t be postponed. Things like a new couch or flatscreen TV, in contrast, are purchased so rarely that many people don’t even remember how much they paid for one, let alone how much they cost today.
The irony is that consumers spend a lot more, on average, on expensive, big-ticket items than they do on groceries or takeout, which means the prices we pay the most attention to don’t contribute very much to overall inflation numbers. (Less than a tenth of the average consumer’s budget is spent at the supermarket.) Some measures of inflation—“core” and “supercore” inflation among them—exclude food and energy prices altogether. That is reasonable if you’re a Fed official focused on how to set interest rates, because energy and food prices are often extremely sensitive to temporary fluctuations (caused by, say, a drought that hurts grain harvests or an OPEC oil-supply cut). But in practice, these measures overlook the prices that matter most to consumers.
This dynamic alone goes a long way toward explaining the gap between “the economy” and Americans’ perception of it. Even as core inflation fell below 3 percent over the course of 2023, food prices increased by about 6 percent, twice as fast as they had grown over the previous 20 years. “I think that explains a huge part of the disconnect,” Paul Donovan, the chief economist at UBS Global Wealth Management, told me. “You won’t convince any consumer that inflation is under control when food prices are rising that fast.”
Consumers say as much when you ask them. In a recent poll commissioned by The Atlantic, respondents were asked what factors they consider when deciding how the national economy is doing. The price of groceries led the list, and 60 percent of respondents placed it among their top three—more, even, than the share that chose “inflation.” This isn’t exactly a new development. In 2002, Donovan told me, Italian consumers were convinced that prices were soaring by nearly 20 percent even though actual inflation was a stable 2 percent. It turned out that people were basing their estimates on the cost of a cup of espresso, which had abruptly risen as coffee makers rounded their prices up after the introduction of the euro.
What’s more, most people don’t care about the inflation rate so much as they care about prices themselves. If inflation runs at 10 percent for a year, and then suddenly shrinks to 2 percent, the damage of the past year has not been undone. Prices are still dramatically higher than they were. Overall, prices are nearly 20 percent higher now than they were before the pandemic (grocery prices are 25 percent higher). When asked in a survey last fall what improvement in the economy they would most like to see, 64 percent of respondents said “lower prices on goods, services, and gas.”
What about wages? Even adjusted for inflation, they have been rising since June 2022, and recently surpassed their pre-pandemic levels, meaning that the typical American’s paycheck goes further than it did prior to the inflation spike. But wages haven’t increased faster than food prices. And most people think about wage and price increases very differently. A raise tends to feel like something we’ve earned, Betsey Stevenson, an economist at the University of Michigan, told me. Then we go to the grocery store, and “it feels like those just rewards are being unfairly taken away.”
If inflation is in fact the main reason the American people have been so down on the economy—and its future—then the story is likely to have a happy ending, and soon. My great-grandmother loved to reminisce about the days when a can of Coke cost a nickel. She didn’t, however, believe that the country was on the verge of economic calamity because she now had to spend a dollar or more for the same beverage. Just as surely as people despise price increases, we also get used to them in the end. A recent analysis by Ryan Cummings and Neale Mahoney, two Stanford economists and former policy advisers in the Biden administration, found that it takes 18 to 24 months for lower inflation to fully show up in consumer sentiment. “People eventually adjust,” Mahoney told me. “They just don’t adjust at the rate that statistical agencies produce inflation data.”
Mahoney and Cummings posted their study on December 4, 2023—18 months after inflation peaked in June 2022. As if on cue, consumer sentiment began surging that month. (Perhaps helping matters, food inflation had finally fallen below 3 percent in November 2023.)
There is another story you can tell about consumer sentiment today, however, one that has less to do with what’s happening in grocery stores and more to do with the peculiarities of tribal identity.
It’s well established that partisans on both sides become more negative about the economy when the other party controls the presidency, but this phenomenon is not symmetrical: In a November analysis, Mahoney and Cummings found that when a Democrat occupies the White House, Republicans’ economic outlook declines by more than twice as much as Democrats’ does when the situation is reversed. Consumer-sentiment data from the polling firm Civiqs and the Pew Research Center show that Republicans’ view of the economy has barely budged since hitting an all-time low in the summer of 2022.
Meanwhile, although sentiment among Democrats has recovered to nearly where it stood before inflation began to rise in 2021, it remains well below its level at the end of the Obama administration. It may never return to its previous heights. Over the past decade, the belief that the economy is rigged in favor of the rich and powerful has become central to progressive self-identity. Among Democrats ages 18 to 34, who tend to be more progressive than older Democrats, positive views of capitalism fell from 56 to 40 percent between 2010 and 2019, according to Gallup. Dim views of the broader economic system may be limiting how positively some Democrats feel about the economy, even when one of their own occupies the Oval Office. According to a CNN poll in late January, 63 percent of Democrats ages 45 and older believed that the economy was on the upswing—but only 35 percent of younger Democrats believed the same. To fully embrace the economy’s strength would be to sacrifice part of the modern progressive’s ideological sense of self.
The media may be contributing to economic gloom for people of every political stripe. According to Mahoney, one possible explanation for Republicans’ disproportionate economic negativity when a Democrat is in office is the fact that the news sources many Republicans consume—namely, right-wing media like Fox News—tend to be more brazenly partisan than the sources Democrats consume, which tend to be a balance of mainstream and partisan media. But mainstream media have also gotten more negative about the economy in recent years, regardless of who’s held the presidency. According to a new analysis by the Brookings Institution, from 1988 to 2016, the “sentiment” of economic-news coverage in mainstream newspapers tracked closely with measures such as inflation, employment, and the stock market. Then, during Donald Trump’s presidency, coverage became more negative than the economic fundamentals would have predicted. After Joe Biden took office, the gap widened. Journalists have long focused more on surfacing problems than on highlighting successes—bringing problems to light is an essential part of the job—but the more recent shift could be explained by the same economic pessimism afflicting many young liberals (many newspaper journalists, after all, are liberals themselves). In other words, the media’s negativity could be both a reflection and a source of today’s economic pessimism.
What happens to consumer sentiment in the coming months will depend on how much it is still being dragged down by frustration with higher prices, which will likely dissipate, as opposed to how much it is being limited by a combination of Republican partisanship and Democratic pessimism, which are less likely to change.
Will the place that it finally settles in come November matter to the election? How people say they are feeling about the economy in an election year—alongside more direct measures of economic health, such as GDP growth and disposable income—has in the past been a good predictor of whom voters choose as president; a healthy economy and good sentiment strongly favor the incumbent. Despite all the abnormalities of 2020—a pandemic, national protests, a uniquely polarizing president—economic models that factored in both economic fundamentals and sentiment predicted the result and margin of that year’s presidential election quite accurately (and much more so than polling), according to an analysis by the political scientists John Sides, Chris Tausanovitch, and Lynn Vavreck.
It is of course possible that consumer sentiment is becoming a more performative metric than it used to be—a statement about who you are rather than how you really feel—and perhaps less reliable as a result. Still, the story that voters have in their heads about the economy clearly matters. If that story were influenced solely by the prices at the pump and the grocery store or the number of well-paying jobs, then—absent another crisis—we could expect the mood to be buoyant this fall, significantly helping Biden’s prospects for reelection. But the stories we tell ourselves are shaped by everything from the news we read to the political messages we hear to the identities we adopt. And, for better or worse, those stories have yet to be fully written.
Russia’s invasion of Ukraine caused deep disruptions in the global food supply, raising prices and increasing the risk of food insecurity in poorer nations in the Middle East and North Africa, America’s top spy agency said in an unclassified report released by Congress on Wednesday.
The direct and indirect effects of the war “were major drivers of one of the most disruptive periods in decades for global food security,” the eight-page report found – in large part because Ukraine and Russia were among the world’s largest pre-war exporters of grain and other agricultural products.
Although food security concerns have abated since the start of this year, according to the report, the future trajectory of global food prices likely will depend in part on what happens with the Black Sea Grain Initiative, which Russia ended in July. The deal, facilitated by the United Nations, had allowed Ukrainian agricultural shipments to safely exit Black Sea ports and reach the international market.
How much acreage Ukraine is able to cultivate as the war continues to rage and the cost and availability of fertilizers will also have an impact on global food prices, the report found. Global fertilizer prices reached near-record levels in mid-2022 as global oil and natural gas prices rose.
“The combination of high domestic food prices and historic levels of sovereign debt in many countries – largely caused by spending and recessionary effects of the COVID-19 pandemic – has weakened countries’ capacity to respond to heightened food insecurity risks,” the report said. “These factors probably will undermine the capacity of many poor countries to provide sufficient and affordable food to their population through the end of the year.”
Droughts last year in Canada, the Middle East, South America and the United States also compounded the war-related stress on global food supplies, according to the report.
Intelligence officials have accused Russia in the past of weaponizing food supplies by blocking Ukrainian exports, destroying infrastructure and occupying Ukrainian agricultural land.
Citing satellite imagery and open-source reporting, the report said that Russia stole nearly 6 million tons of Ukrainian wheat harvested from occupied territories in 2022. Cargo ships used to transport the stolen grain out of Russian-occupied territories in 2022 would steer along the coast of Turkey to deliver shipments to ports in Syria, Israel, Iran, Georgia and Lebanon, the report said.
“We cannot confirm if the buyers of the Russian cargoes were aware of the grains’ Ukrainian origin,” the report said.
The report was mandated by the annual intelligence authorization bill and released by the House Intelligence Committee.
“This report casts light on the war’s broader disruption to global food security and reveals how (Russian President Vladimir) Putin has intentionally used food security and the threat of starvation as a negotiating chip,” committee leaders Reps. Mike Turner and Jim Himes said in a statement. “Russia’s recent refusal to renew the Black Sea Grain Initiative will worsen this crisis, driving vulnerable nations into food shortages that could leave millions struggling to eat.”
Brits woke up to yet more grim news on inflation Tuesday, with new data showing prices in UK stores are rising at a record pace. It’s the latest sign of a seemingly intractable cost-of-living crisis that has Prime Minster Rishi Sunak considering drastic measures, includingprice controls, to keep inflation in check.
The cost of store items, known as shop price inflation, rose 9% through the year to May, a fresh high for an index thatdates back to 2005, according to the British Retail Consortium. Food inflation dipped slightly to 15.4% in May, but that’s still the second-highest rate on record.
Lower energy and commodity costs helped reduce prices of some staples, including butter, milk, fruit and fish. But chocolate and coffee prices are rising as global commodity prices soar, British Retail Consortium CEO Helen Dickinson said.
The slight drop in food prices will give cold comfort to consumers, and piles the pressure on Sunak, who has promised to halve inflation this year as one of his five pledges to voters.
The British public “are still wincing when their total comes up at the checkout… a weekly shop that cost £100 last year is now clocking in at £115,” Laura Suter, head of personal finance at stockbroker AJ Bell wrote in a note.
Poor households are being hit the hardest because they spend more of their disposable income on food. More people are using food banks in the United Kingdom than ever before, eclipsing even the peak of the pandemic.
The Trussell Trust, the UK’s biggest food bank network, handed out close to 3 million emergency food parcels over the 12 months to March 2023 — a 37% increase on the previous year.
Even the Bank of England, tasked with keeping inflation at 2%, has been caught off guard by stubbornly high food prices, which seem to have barely responded to 12 successive interest rate hikes.
Food prices have contributed to keeping inflation “higher than we expected it to be,” Bank of England Governor Andrew Bailey told a Treasury committee hearing last week. “We have a lot to learn about operating monetary policy in a world of big shocks,” he admitted.
The United Kingdom’s inflation problem is now so dire that Sunak isconsidering asking retailers to cap the price of essential food items, in a throwback to the 1970s. Back then, governments in the United States and United Kingdom imposed wage and price controls to tame inflation, although the policies weren’t very effective at bringing inflation down and were later dropped.
Economists say that capping prices encourages companies to produce less of a product, while making it more attractive to consumers. Supply goes down, and demand goes up, with shortages being the inevitable result.
Price controls distort markets and should only be used “in extreme circumstances,” Neal Shearing, group chief economist at Capital Economics, wrote in a note Tuesday. “The current food price shock does not warrant such an intervention,” he added.
The Sunday Telegraph was first to report the government’s proposal, which was quickly rejected by retailers.
Andrew Opie, director of food and sustainability at the British Retail Consortium said controls would not make a “jot of difference” to high food prices, which are the result of soaring energy, transport and labor costs.
“As commodity prices drop, many of the costs keeping inflation high are now arising from the muddle of new regulation coming from government,” Opie added in a statement. These include tighter rules onrecycling and full border controls on food imports from the European Union, due to be implemented by the end of this year.
According to a government spokesperson, any price caps would not be mandatory. “Any scheme to help bring down food prices for consumers would be voluntary and at retailers’ discretion,” the spokesperson said in a statement shared with CNN.
Sunak and Finance Minister Jeremy Hunt “have been meeting with the food sector to see what more can be done,” the spokesperson added.
For Sunak, the pressure is on — particularly ahead of a general election widely expected to be held next year. Inflation was hovering above 10% when he made the promise to halve it in January. It dropped back to 8.7% in April, still well above his target. The Bank of England expects it to fall to “around 5%” by the end of this year, leaving little margin for error.
According to Opie of the British Retail Consortium, the government should focus on “cutting red tape” rather than “recreating 1970s-style price controls.”
At the top of the list of burdensome regulations are those introduced as a result of the country’s exit from the European Union, which is its main source of food imports.
Brexit is responsible for about a third of UK food price inflation since 2019, according to researchers at the London School of Economics.
New regulatory checks and other border controls added nearly £7 billion ($8.7 billion) to Britain’s domestic grocery bill between December 2019 and March 2023, or £250 ($310) per household, economists at the LSE’s Centre for Economic Performance wrote in a recent paper.
Food prices rose by almost 25 percentage points over this period. “Our analysis suggests that in the absence of Brexit this figure would be 8 percentage points (30%) lower,” the researchers wrote.
Imports of meat and cheese from the European Union were now subject to high “non-tariff barriers.”
Beijing will give out a $6 monthly cash subsidy to low-income residents to cushion the impact of rising food prices, a move that has unexpectedly angered many online who say the amount is far too low.
The announcement from the city government comes as food inflation accelerated in China after policymakers scrapped their zero-Covid strategy in December and eased monetary policy further to fuel economic recovery.
Last week, protests by retirees broke out in the cities of Wuhan and Dalian over cuts to their medical care benefits, highlighting the growing risk of unrest over livelihood issues as China’s economy struggles to regain its footing after being drained by pandemic policies.
The demonstrations were the latest outburst of public discontent since mass protests against Covid curbs gripped the country late last year. The recent protests underscoredthe financial pressure on local governments, after three years of the zero-Covid policy strained their coffers and a property market slump severely eroded their income.
According to the Beijing Municipal Commission of Development and Reform, the city’s economic regulator, more than 300,000 people on low incomes will each receive a cash payment of 40 yuan (about $6) per month. The first payment will be given out later this month and it’s unclear for how long they will continue.
“In January, food prices in Beijing rose by 6.6%, meeting the conditions for starting the price-linked subsidy program,” the state-run Beijing Daily newspaper quoted an official from the commission as saying in a Friday report.
“[We will] try to do a good job in ensuring the basic livelihood of the needy people … and continuously enhance the people’s sense of gain, happiness and security.”
China launched a low-income subsidy program in 2011 to offer cash handouts to the needy when the consumer price index or food prices hit certain thresholds. Each city or region sets its own standard as living costs vary across the country.
The news of Beijing’s latest handout was not well received by the public, who took to social media to complain about the high cost of living in the city.
“40 yuan? Are you serious? [When]the low-income people take the subway to collect the money and then they return, they lose 8 yuan,” said one comment on Weibo.
“Is it like an insult? [The amount] just subsidizes a bowl of noodles,” another Weibo user said.
Some people criticized the country’s weak social welfare system, while others blasted the government’s move to write off billions of debt to other countries.
“Can’t we question the move? Do you think the current welfare system in our country is good? Can it meet the needs of people?” one said.
China’s consumer inflation accelerated in January, as the CPI rose 2.1% from a year earlier. Although the headline figure remains relatively low compared to other countries, food prices jumped 6.2%, with pork and fruit prices rising the most.
In Beijing, food prices outpaced the national level. Vegetable prices soared 24% last month.
“The San Diego Field Office has recently noticed an increase in the number of eggs intercepted at our ports of entry,” wrote De La O in the Tuesday tweet. “As a reminder, uncooked eggs are prohibited entry from Mexico into the U.S. Failure to declare agriculture items can result in penalties of up to $10,000.”
Bringing uncooked eggs from Mexico into the US is illegal because of the risk of bird flu and Newcastle disease, a contagious virus that affects birds, according to Customs and Border Protection.
In a statement emailed to CNN, Customs and Border Protection public affairs specialist Gerrelaine Alcordo attributed the rise in attempted egg smuggling to the spiking cost of eggs in the US. A massive outbreak of deadly avian flu among American chicken flocks has caused egg prices to skyrocket, climbing 11.1% from November to December and 59.9% annually, according to the Bureau of Labor Statistics.
The increase has been reported at the Tijuana-San Diego crossing as well as “other southwest border locations,” Alcordo said.
For the most part, travelers bringing eggs have declared the eggs while crossing the border. “When that happens the person can abandon the product without consequence,” said Alcordo. “CBP agriculture specialists will collect and then then destroy the eggs (and other prohibited food/ag products) as is the routine course of action.”
In a few incidents, travelers did not declare their eggs and the products were discovered during inspection. In those cases, the eggs were seized and the travelers received a $300 penalties, Alcordo explained.
“Penalties can be higher for repeat offenders or commercial size imports,” he added.
Alcordo emphasized the importance of declaring all food and agricultural products when traveling.
“While many items may be permissible, it’s best to declare them to avoid possible fines and penalties if they are deemed prohibited,” he said. “If they are declared and deemed prohibited, they can be abandoned without consequence. If they are undeclared and then discovered during an exam the traveler will be subject to penalties.”
Blame Russia, the weather, disease and a host of other factors.
“Even though we’re seeing inflationary pressures ease, we still have a war in Ukraine,” said Tom Bailey, senior consumer foods analyst with Rabobank. “Fertilizer costs have improved, but they still remain very high. Energy costs have improved, but they still remain relatively high. Labor costs still remain a problem — and the list goes on.”
Weather and disease are heavily affecting certain products’ prices, too – and none have been more rotten than egg prices: They’re up 59.9% year over year, a rate not seen since 1973,when high feed costs, shortages and price freezes caused certain agricultural products to soar in price. Since early last year, a deadly avian flu has devastated poultry flocks, especially turkeys and egg-laying hens. That was compounded by increasing demand and higher input costs, such as feed.
As a result, people like Jim Quinn are shelling out upwards of $6 and $7 for a dozen eggs.
Quinn has run daytime eatery The Hungry Monkey Café in Newport, Rhode Island, with his wife, Kate, since 2009. As a breakfast and lunch joint, it leans heavily on eggs for the majority of dishes on its menu — and especially for the 15-egg King Kong omelet novelty food challenge at the restaurant.
Even though eggs and seemingly every other ingredient have risen in price during the past year, Quinn and The Hungry Monkey have chosen to eat the cost.
“I’m trying to hold the line on the prices without having to increase them,” Quinn said. “It makes it extremely challenging for a mom-and-pop [business].”
He added: “We’re just trying to stay alive and hope that things will come down.”
But there’s good news on the horizon. The cost of food is still hard to swallow, but the latest Consumer Price Index shows that those price increases — by and large — are at least growing at slower rates.
In December, “food at home” prices increased 0.2% from the month before.That’s the smallest monthly increase since March 2021.
The expectations are for food price increases to continue to moderate, Bailey said.
“I suspect over the next 12 months we will see improvements in supply, improvements in the conditions that have been challenging across most of our food categories,” he said, “and we’ll finally start to see prices, at least upstream, really starting to come off. And then maybe it’s 2024 where we could eventually see some deflation for food.”
Here’s a look at how prices are trending across certain food categories in December, according to BLS data:
Eggs: +59.9% annually; +11.1% from November
Butter and margarine: +35.3% annually; +1.7% from November
Lettuce: +24.9% annually; +4% from November
Flour and prepared flour mixes: +23.4% annually; -1% from November
Canned fruits and vegetables: +18.4% annually; +0.3% from November
Bread: +15.9% annually; +0.2% from November
Cereals and cereal products: +15.6% annually; -0.3% from November
Coffee: +14.3% annually; +0% from November
Milk: +12.5% annually; -1% from November
Chicken: +10.9% annually; -0.6% from November
Baby food: +10.7% annually; -0.2% from November
Fresh fruits: +3.4% annually; -1.9% from November
Uncooked ground beef: +0.7% annually; -0.1% from November
Bacon and related products: -3.7% annually; -2.9% from November
Uncooked beef steaks: -5.4% annually; +0.9% from November
From November 1 to December 24, shoppers still had to dig deep for gifts, with retail sales jumping 7.6%, unadjusted for inflation, compared to the same period last year, according to the Mastercard Spending Pulse, which tracks retail sales, excluding automotive sales. Holiday meals were also more expensive, and food prices outpaced inflation throughout the year.
But while some items saw massive double-digit increases in 2022, others were a deal. Here’s how prices changed this year.
Consumer demand for big-ticket electronics has fallen recently, leading stores to discount.
In the year through November, several major electronics got cheaper: Smartphone prices plunged 23.4%, TV prices dropped 17% and computers got 4.4% less expensive.
The price of major appliances fell 1%.
Earlier in the year, chains like Best Buy and Walmart stocked up on merchandise, preparing for supply chain shortages and what they projected to be robust consumer demand. But their plans were derailed by inflation and slumping consumer confidence.
Plus, many consumers had alreadymade large purchases or upgrades while stuck at home early in the pandemic.
Apparel prices rose, but slowly. Clothing increased 3.6%, while footwear rose 2.3%. Sporting goods increased 2.7% and toys 0.6%.
The increases made these items a relative bargain, as they were all outpaced by overall inflation.
“In toys, sporting goods, apparel, categories like that, prices have come down more aggressively,” Walmart CEO Doug McMillon said in an interview on CNBC in December. “We’re still inflated but we’re not inflated nearly as much as we are in the other categories.”
Here, again, many retailers misjudged consumer demand and so had excess inventory pile up. To clear out merchandise and entice shoppers to buy, stores ramped up promotions. This kept prices in check.
In March, Delta president Glen Hauenstein called the spike in demand “unprecedented,” adding “I have never seen … demand turn on so quickly as it has after Omicron,” the Covid-19 variant that caused cases to spike last winter.
Many airlines reported record revenue in April, May and June thanks to high airfares and full planes as travelers returned in full force two years into the pandemic.
On the ground, travel got more expensive, as well. Gasoline prices were up 10.1% for the year, but are now off their record highs. Volatility in gas prices was largely due to Russia’s invasion of Ukraine and geopolitical maneuvers that used oil supply as a tool.
Still, the national average could still climb back above the $4-a-gallon threshold as soon as May, according to GasBuddy projections shared with CNN.
GasBuddy, an app that tracks fuel prices, doesn’t anticipate another year of extreme volatility, however.
In that period, several individual grocery items got even pricier for a variety of reasons.
Egg prices shot up a massive 49.1%, due to a supply shortage caused by a deadly avian flu, coupled with high demand.
Margarine got 47.4% pricier because of price swings in the vegetable oil market caused largely by the war in Ukraine, while butter got 27% more expensive after a contraction in the global milk supply.
Overall, grocery prices jumped 12% in the period, with many consumers accepting the higher prices as thriftier alternatives to restaurant meals, which also grew more expensive, though at a slower clip. Food away from home became 8.5% more expensive in 2022, with many restaurants hiking up menu prices in order to mitigate their own higher input costs.
— CNN’s Matt Egan and Chris Isidore contributed to this report.
Samuel Roe, regional sales manager for Terlato Wines, had business associates visiting a few weeks ago and called a friend at one of the most expensive rooftop eateries in New York to ask if his group could get a table.
He got a reservation, he said, but also a request: “Make sure to spend money.”
Executives with corporate expense accounts who used to order $200 bottles of wine are “showing off” and ordering $1,000 ones these days, Roe explained. His friend didn’t want to get in trouble for bringing in a less-profitable party. The restaurant’s private room goes for $12,000 a night. Lately, it is always booked.
Boosted by a Covid-eratax break-window that closes at the end of the year — and under pressure to cement ties and reassure clients — companies are now spending big on wining and dining current and potential customers.
“The last two to three years have been incredibly difficult,” said Thomas Donohue, chief marketing officer for Culinary Solutions, a Sterling, Virginia food company whose partners and clients include Starbucks
(SBUX), Hilton
(HLT) and American Airlines
(AAL).
“We wanted to reconnect with these people, we needed splash, engagement,” he saId. The company, which has operations globally, needed something that would make clients “want to get on a plane from Singapore, from Japan” to attend.
On Jan. 26 Culinary Solutions is hosting elaborate events with celebrity chefs in Washington, DC, Reims, France and Bangkok to celebrate “sous vide” day, the French cooking technique the company specializes in.
Donohoe declined to disclose costs but noted that in France, “there may be a castle and Champagne caves.”
The wining and dining surge began last summer and accelerated when many Wall Street workers were ordered back to the office in the fall, said chef Eric Ripert of New York seafood eatery Le Bernardin, athree-star Michelin restaurant that is one of the city’s most expensive.
“It’s just like when kids go back to school and don’t want to, but then they get excited,” he said. “It’s just like that but with adults. And tequila.”
Corporations, hedge funds, and especially real estate companies “are realizing the recovery is another year or so away,” said New York event planner Lawrence Scott. “They figure the only way they are going to stay in the biz is entertaining.”
Events are smaller, say 60 guests instead of 200. “They’re inviting the [clients] who will keep their boats afloat.”
Le Bernardin’s private rooms have been largely booked for the holidays since late September, Ripert said. And in the restaurant, guests typically opt for the $298 chef’s tasting menu — $468 with wine pairings. Business has specifically been boosted, Ripert’s managers tell him, by the soon-to-expire tax break.
Dubbed the enhanced deduction, “for 2021 and 2022 only, businesses can generally deduct the full cost of business-related food and beverages purchased from a restaurant. Otherwise, the limit is usually 50% of the cost of the meal,” according to the IRS.
This kind of spending, of course, is in direct contrast to what most consumers are doing when they’re paying for meals themselves: cutting back sharply. Inflation and gas costs are historically high and recession worries are mounting.
Meanwhile, the restaurant industry is still struggling with “staffing, food costs and supply issues,” said Food-TV celebrity chef Maneet Chauhan, who owns Indian, Chinese and American restaurants in the Nashville area.
But companies feel they have to spend to compete and to keep their relationships upbeat, especially after years of lockdowns and Zoom meetings.
“Everything changed after Covid,” said R. Couri Hay, publicist in New York. “People don’t want to go out anymore, they got lazy. They started to edit events – and when they do go out, they say ‘Wonderful you’re still here, you’re still alive!’ ”
In particular, companies are scrambling to attract younger guests and the next generation of businesses, Hay said. “They think: You’ve got to do an extravaganza.”
During the pandemic, group dinners or parties were rare. At first charity events started returning, then weddings. After that, according to restaurateurs and event planners across the country, came bar and bat mitzvahs.
But now it is bankers, watch manufacturers, real estate investors and executives launching new projects, withmanufacturers, retailers and “tech bros” also throwing the more expensive dinners and lavish parties.
Bill Laurie, an auto-technology supplier, has begun taking current and prospective clients out to dinner again at top Detroit and Dearborn, Michigan restaurants at costs of up to several hundred dollars per person. “It’s not extravagant if you do it right,” he said.
In this post-Covid era “people want to feel attended to,” Laurie said. And the hospitality goes beyond spending money on them to asking them what they think of the market, or about their family, he said.
Certainly, there may be some businesses taking a generous view of the IRS rules. The deduction, which was meant to help support restaurants during the pandemic, only applies to restaurant meals, and only if a member of the client company is present. And businesses can’t deduct expenses for meals that are “lavish or extravagant.”
But, according to the IRS, “an expense isn’t considered lavish or extravagant if it is reasonable based on the facts and circumstances.”
That definition leaves a lot of wiggle room.
“Meal expenses won’t be disallowed merely because they are more than a fixed dollar amount,” according to the IRS, “or because the meals take place at deluxe restaurants, hotels, or resorts.”
But even in this more accommodating environment, client expectations have to be managed, Laurie said. Because of inflation, he can no longer say, “order anything on the menu.”
Now he says,“even if caviar is on the menu, caviar is not on the menu.”
Prices at the grocery store continued to soar last month, adding even more pressure to shoppers’ wallets.
The food at home index, a proxy for grocery store prices, increased 0.7% in September from the month prior and a stunning 13% over the last year, according to new government data released Thursday.
Just about everything got more expensive in September.
Fruits and vegetables surged 1.6% for the month, while cereals and bakery products rose 0.9%. Other groceries increased 0.5% in September, following a 1.1% increase in August.
Meats, poultry, fish and eggs rose 0.4% over the month and beverages increased 0.6%.
Prices on many of these items are up double digits annually.
A number of factors have contributed to the surge in prices. Producers say they’re paying more for labor and packaging materials. Extreme weather, including droughts and flooding, and disease, such as the deadly avian flu, have been hurting crops and killing egg-laying hens, squeezing supplies.
“The environment clearly is still very inflationary with a lot of supply chain challenges across the industry,” Pepsi
(PEP)CEO Ramon Laguarta said on an earnings call Wednesday. The company’s prices increased 17% annually.
Meanwhile, demand is high. Consumers may be able to pull back on some discretionary items, but they have to eat. Many people are still working from home and consuming more of their meals there than they did before the pandemic.
This imbalance between supply and demand means companies can pass along higher prices to shoppers without sales plunging.
But higher prices at the grocery store are forcing customers to make some trade offs.
Many shoppers are buying fewer products, switching to cheaper private-label brands and pulling back on discretionary items.
More than one million new households have shopped at discount grocery chain Aldi for the first in the past year, according to the company.
Walmart
(WMT) said recently that high levels of food inflation are impacting customers’ ability to purchase discretionary goods such as clothing and furniture.
