Restaurants across the country are seeing higher prices from suppliers, in addition to rising energy prices.
Potato prices rose 6.1% from June to July 2022 and 21.8% from July 2021.
At some point, many restaurant owners are forced to pass these higher costs on to their customers, who may be less inclined to dine out. This adds another strain on restaurants, which have struggled to regain their collective feet since the pandemic.
Potato prices rose 6% in July
In April 2020, the average price of white potatoes was 85 cents per pound, and in July 2022 it was almost 93 cents. Wholesale potato prices for 50 pounds of Idaho potatoes on August 18, 2022 ranged from $1 to $4, according to the United States Department of Agriculture (USDA). Factors contributing to higher potato prices include lower supply, high fuel and increased labor costs.
The exploitation part of the retail price of the potato has fluctuated between 15% and 18% in recent years. Adding more fuel to high potato prices include heat waves that hit Idaho last year and caused potato yields to drop. Idaho produces one-third of all potatoes grown in the country. Potato prices have increased mainly due to the shortage of supply. This year, tighter potato supplies may see some alarm as the harvest of new potato crops in Idaho began last week and will continue to increase.
Although inflation eased from a peak of 9.1% in June to 8.5% in July, food prices remain high across the board. The eating-out index in July rose 10.9% over the past year, the biggest 12-month increase since the period ending in May 1979. The eating-out index rose a 0.7% in July after increasing 0.9% in June. The limited-service meal index rose 0.8% and the full-service meal index rose 0.6% for the month.
Shortage of supply Increase in the price of fuels
Price spikes come from the supply side due to rising costs of labor, machinery, fuel, fertilizers, crop seeds and other inputs. Rising production and transportation costs are driving producers, transporters, wholesalers and retailers to share some of the costs with consumers.
Overall, the food index rose 1.1% in July, the seventh consecutive monthly increase of 0.9% or more. The eat-at-home index rose 1.3% in July as all six major grocery store food group indexes rose. The non-alcoholic beverage index rose the most, rising 2.3% while the coffee index rose 3.5%. The index of other food at home rose by 1.8%, as well as the index of cereals and bakery products. The dairy and related products index increased by 1.7% during the month. The meat, poultry, fish and egg index rose 0.5% in July after falling in June. The fruits and vegetables index also increased by 0.5% during the month.
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