By Kellie Hwang, SAN FRANCISCO CHRONICLE
July 20, 2022
It’s no mystery that everything costs more these days, with the inflation rate soaring to 9.1% year-over-year in June, the largest increase in more than 40 years.
While the prices at the gas pump have been making most of the headlines, in the San Francisco metro area, groceries have seen some of the biggest increases year-over-year, according to the latest consumer price index data.
According to the Bureau of Labor Statistics, from June 2021 to June 2022, prices rose 10.2% for the overall food and beverages category, and 13.8% for groceries (officially called “food at home” by the Bureau of Labor Statistics).
From April to June, the highest increase in a specific category was 4.7% for fruits and vegetables (the other food at home category, which includes butter, sugar and sweets, went up 5%). Prices of goods and services in the San Francisco metro area are up 6.8% year-over-year in June, and 1.7% from April to June. The metro area is defined as Alameda, Contra Costa, Marin, San Francisco and San Mateo counties.
An April Chronicle analysis of consumer price index data showed that a person in the Bay Area will spend about $4,400 more per year on major goods and services, including about 9% more on food.
The reason for these increases is a combination of factors that have been plaguing the global economy for a while now: increased gas and transportation prices, supply chain issues and escalating labor costs, said Jamie Court, president of nonprofit Consumer Watchdog.
“This is particularly true for imported fruits and vegetables,” he wrote in an email. “The cost of transport is prohibitive. Getting grapes from South America to California can be double what it cost previously based on shipping costs. Mexico’s minimum wage doubled recently.”
He added that there are some new agricultural inspection requirements at the U.S.-Mexico border that add to the costs of produce coming from Mexico.
“It all adds up to more money,” he said. “Grocery stores know that fruits and vegetables are what bring people into the store. They are less likely to raise those prices, but it has become inevitable to do it now based on increased transportation, supply chain, labor and regulatory costs.”
But still, it’s a bit of a head-scratcher because the Bay Area is in close proximity to farmland, Court said. Higher prices for produce imports coming from South America make sense due to transportation costs.
Nate Rose, a spokesperson for the California Grocers Association, which represents hundreds of food retailers and suppliers, said that the pandemic “completely disrupted our food system,” where the demand for groceries shot up as fewer people dined out. Another disruptor is the Russia-Ukraine war, as both countries are major worldwide grain producers.
“All these issues are happening at the same time, and the grocery store shelf is one of those places where all that comes to a head,” he said. “Transportation costs are up more than 20%, energy costs are up 35%, all those things converge at the store.”
He added that in the Bay Area, particularly San Francisco, “the cost of doing business is just higher,” from “regulatory burdens” including garbage collection, higher labor costs, more security needed at some stores due to retail theft, and just a more expensive cost of living overall.
So how long might Bay Area residents be seeing especially high grocery store receipts?
“It’s anybody’s guess what’s next, but it feels like the upward pressure on prices will continue until inflation subsides,” Court said. “It’s inflation in transportation, wages and supply chain issues driving the increases, and these forces have to moderate before grocery prices fall.”