Are Groceries More Expensive? Reports Of Jump In April Amid Coronavirus Pandemic

Grocery prices in April jumped 2.6% amid the ongoing coronavirus pandemic, the Bureau of Labor Statistics (BLS) said Tuesday. The prices of meat, eggs, poultry and fish increased by 4.3% during the month, as the virus weighed on food-supply chains.

Although President Trump has ordered meatpacking plants to stay open, facilities across the country have closed due to the impact of the coronavirus. On Wednesday, a sausage plant in northeast Kansas shut down after five employees tested positive for the virus.

Dairy and related products, along with fruits and vegetables, saw a 1.5% increase in price, while cereals and bakery goods experienced the largest-ever jump of 2.9%.

Farmers across the country have gotten rid of milk, eggs and other staples as demand has weakened. The federal government has unveiled a $19 billion financial aid package for the agricultural sector amid the crisis.

Although prices of groceries are rising, the U.S. economy also risks deflation, with consumer prices in other areas falling 0.8% during the month. The decrease was largely driven by the plunge in oil prices.

Economists believe deflation would hurt the economy, as consumers and businesses delay purchases amid falling prices.

Deflation was last witnessed during the Great Depression of the 1930’s, with farmers struggling to get sufficient payments for their crops. During this period, farms across the country went out of business.

“The serve demand shock from the COVID-19, the collapse of oil prices and the stronger dollar will continue to exert strong deflationary pressure on prices,” Gregory Daco, the chief economist at Oxford Economics, told the Associated Press.

The Federal Reserve has lowered interest rates to boost buying amid the crisis, but deflation could be a difficult problem for policymakers to tackle. “If deflation becomes embedded in the economy, it can be difficult to uproot," Gus Faucher, chief economist at PNC Financial Services, told PBS.

Unemployment is another major challenge for the economy. In April, the unemployment rate reached 14.7%, with 20.5 million jobs lost during the month. The U.S. passed a $2.2 trillion financial aid package in March to help workers, but economic figures could be grimmer in the coming months.

Most U.S. states have made plans to begin lifting their shutdown orders to curb the spread of infection, but public health officials have warned of a spike in cases if social distancing measures are removed too soon.

The U.S. has the most coronavirus cases in the world at 1,379,756, and the highest death toll at 83,150, as of Wednesday at 1:40 p.m. ET.