June / July 2024
Spring gatherings this year have consumed much of our time, energy, and money, just as food inflation hits a 30-year high. In this issue of Carolina Journal we bring you the latest news from your state capital, but also an inside look at how political donations are flowing with just months to go until the 2024 election.
The impact of higher prices on North Carolina families cannot be discounted. Graduations, end-of-year celebrations, Mother’s Day, and beach trips are all blessings for sure, but the grocery bill for all these events makes equally clear that food, for many, has quickly become a luxury item.
Manufacturing researchers recently released data showing that a North Carolina family of four spends an average of $1,236 per month on groceries, and in our state, grocery spending is 8.7% of total consumer spending, the 16th highest of all US states.
The US Department of Agriculture says that since 2022, Americans have spent roughly 11% of their income on food, the highest rate in 30 years.
New Consumer Price Index data shows that the CPI is up 0.3% after rising 0.4% in March. The Labor Department’s Bureau of Labor Statistics says their “all items” index increased 3.4% over the last 12 months, and the wholesale inflation rate hit its highest point in a year.
Regardless of talking points coming from the White House and our governor’s mansion about the economy’s resiliency, grocery prices are where North Carolinians truly gauge the health of the economy and the stability of their own households. Food is essential. Many families have trimmed non-essentials in the last few years, but grocery basics are non-negotiable.
Families at the lower end of the economic spectrum spend a higher percentage of their income on food. The reasons for this vary, from where they live to the shopping options available. However, we are all feeling it. Each visit to my local supermarket is startling. The prices of milk, meat, and other basics seem skyrocketing. It doesn’t take much digging to find out that food prices have risen in the last three years at the highest rate since the Great Inflation of 1979-1983.
In fact, the CPI subindex for food rose almost 25% between March 2020 and March 2024. Breaking it out further, the price of eating at home rose 24.7% over the last four years, while eating out of the house rose 25.6%.
The prices led me to meet with economists and food producers this month to learn more. We’ve begun to hear accusations on the campaign trail of price gouging, but experts say the cost of producing food, from farming to packaging and transportation, is rising every week. One meat producer said that historically, he could count on packaging materials rising about 2% per year, but over the last six months, meat packaging prices have escalated between 8% and 11% a month.
WHY ARE GROCERY PRICES SO HIGH?
Several factors affect the cost of our carts. Among them, of course, are the government-imposed COVID shutdowns. Workers and factories could not operate at a regular capacity, so the government picked “essential” businesses that could stay open and “non-essential” businesses that could not, meddling with the consumer market and the availability of goods. Supply chains were disrupted, and when people finally could shop, they wanted to buy, driving up demand.
However, four years later, many people are having trouble continuing to blame the shutdowns. What else is doing this to us? Experts say the spike in energy prices is driving up the cost of everything, not price gouging or residual COVID supply chain problems. The problem is likely to get worse, according to Jon Sanders, director of the Center for Food, Power, and Life at the John Locke Foundation.
“The North Carolina Utilities Commission (NCUC) recently approved large, three-year rate hikes on Duke Energy Progress (11.3 percent) and Duke Energy Carolinas (14.6 percent) customers,” wrote Sanders. “Worse, the NCUC’s Public Staff has warned that rates could be “approximately double” after the next round of rate hikes beginning after 2026.”
Energy is a common cost challenge in agriculture, manufacturing, transportation, and retail. Underinvestment in our grid and misdirected incentives for energy production, combined with policy efforts to move too quickly to a “green economy,” have driven up the price of energy and, therefore, the price of food.
The White House is trying to rewrite economic history as the November elections approach. President Biden has repeated the claim this month that inflation was 9% when he was inaugurated, which is not even close to true. The year-over-year inflation rate the month he was sworn into office, January 2021, was 1.4%. And gas prices? $2.39 per gallon. It seems like a generation ago, but it’s been just over three years. Prices like these undermine all voters’ confidence in the economy, regardless of their political party.
In recent Carolina Journal polls, 80% of North Carolinians say they spend more on groceries than a year ago. As families prepare for summertime activities, the cost of everything will impact how much they spend in restaurants, on vacation, and elsewhere. However, those who don’t have those luxuries will have to cut basic sustenance to pay for the runaway spending of our federal government.
Inflation is more than just frustrating or inconvenient. It is a painful tax on all voters, particularly the poorest among us. In June 2022, inflation was 9.1%. Pew Research Center found that the 2022 midterm elections saw a higher rate of Trump voters returning to the polls and a higher drop-off rate among Biden voters, meaning many Biden voters did not show up to cast a midterm ballot.
Inflation fatigue is real, and with current rates at 3.4%, it is likely to push other election-year issues to the periphery as voters look for light at the end of the tunnel.