Recently two faculty members from Texas Tech's Department of Agricultural and Applied Economics – Stephen Devadoss & Donna McCallister – were interviewed by reporter Keri Heath for a Page 1 story for The Daily News in Galveston, Texas. Here's part of the conversation.

Like many Galveston County residents, islander Cristi Kitchen has noticed in the past few months the gradual but significant rise in her grocery bill each month. A trip to the grocery store is costing about $15 more now than it was months ago, she said. “I'm a single mom of two, so everything is budgeted,” Kitchen said.

Food price inflation is running hot, threatening to squeeze profit from grocery store chains, which are passing increases on to consumers across the county and country. An amalgamation of problems, driven by factors from pandemic stimulus money to shutdowns, have choked supplies and driven up prices on all types of things. 

Food prices have been steadily rising over the past year, said Stephen Devadoss, the Emabeth Thompson Endowed Professor with Texas Tech's Department of Agricultural & Applied Economics. For meat, dairy and some vegetable products, prices could be as much as 20 percent higher than they were pre-pandemic, he said. Initial jumps in the prices happened with COVID-related shutdowns.

“Some of those processing plants could not operate for several months,” Devadoss said. “That caused a huge problem in the supply of meat coming to the grocery stores. Consequently, the prices went up.” 

Donna McCallister, an assistant professor in Texas Tech‘s Department of Agricultural & Applied Economics, argues the overall increase in food prices has probably been about 5 percent between October 2020 and October 2021. Typical food price inflation is about 2 percent annually, she said. Part of the reason consumers are seeing higher prices is because people are buying more of everything, she said.

“It all starts from the stimulus payments,” McCallister said. “We have more money to spend. As consumers, we are demanding more products. The shipments coming into California, they are being bottlenecked there because we have so much more product coming into the United States.” 

While Devadoss doubts climate and weather are having a significant cause for the food price in recent months, McCallister thinks some negative weather effects on crops could contribute to higher food prices. Now that prices are high, stores aren't likely to lower them again, in part to stay competitively priced with surrounding stores, Devadoss said. “Once prices go up, the stores, they are very reluctant to bring it down,” he said. 

CONTACT: Phillip Johnson, chair and director of the Thornton Agricultural Finance Institute, Department of Agricultural and Applied Economics, Texas Tech University at (806) 834-0474 or phil.johnson@ttu.edu

1213NM21 / PHOTO ILLUSTRATION: N Martin