From beef and bacon to eggs and butter, here's how inflation is affecting the price of groceries

A pound of sliced bacon is, on average, 26% higher today than it was a year ago.

Prices are going up: Here's how inflation can affect you

It seems like inflation is here to stay, at least in the near term. Rising prices have been a growing concern throughout the pandemic, and while some economists were quick to describe those fluctuations as temporary, recent reports from the Bureau of Labor Statistics are making those concerns harder to write off.

Year-over-year inflation came in at 6.8% for November, a high not seen in almost 40 years, according to the most recent consumer price index from the Bureau of Labor Statistics. It was even higher at the wholesale level: The producer price index for final demand rose 9.6% in November from where it was 12 months ago.

Earlier in the summer, it was easier to blame increases in the consumer price index on outliers like new and used cars. Shortages in microchip prices pushed automobile prices sky high, but that only affected people trying to get a new set of wheels.

Now rising prices are spread widely across an array of goods that the index measures. "Further evidence of inflation broadening out, [is that] household furnishings, apparel, and the usual suspects of new and used vehicle prices all posted outsized increases in November," Greg McBride, chief financial analyst at Bankrate, said in a statement after last week's consumer price index numbers dropped. "Even airfare, which had declined in recent months, rebounded with a 4.7% increase in the month of November."

And most shoppers are seeing the impact on their grocery bill.

Pantry staples see big price hikes as holidays approach

You've probably noticed that you're paying a lot more at the grocery store lately. Meat prices, in particular, have seen huge increases in price in the last year.

The average price for a pound of ground beef is up more than 14% in the last 12 months, according to BLS data. The average price for a pound of sliced bacon is more than 26% higher.

Inflation isn't just hurting carnivores, though. Other staples like milk and bread have been hit by rising production costs, and those increases are now being passed onto consumers. A dozen eggs cost almost 20% more than a year ago.

A lot of that increase in production cost can be blamed on two factors and, particularly in the dairy industry, both are related to transportation, says Matt Gould, president of the Dairy Market Analyst. For starters, gas is really expensive right now: A gallon of regular unleaded is 60% more than it was a year ago, according to BLS.

Equally as difficult for dairy producers, however, is the ongoing shortage of truck drivers, Gould says. The lack of truckers feels more acute now but the shortage actually predates the pandemic, and industry folks expect that problem to continue for the next 1 to 5 years, he says.

Paper and cardboard for packaging are more expensive, too, and there is fierce competition to hire workers inside the dairy factories.

"People think it's going to last long enough that they're just reducing what they're making," Gould says, "because they they don't see that they can resolve their labor situation in the near term." That likely means less product on the shelves for grocery shoppers, and yes, probably elevated prices.

You can still find bargains — like on butter

There's not much shoppers can do about higher prices overall, but keep your eyes peeled for deals when you see them. Butter, for example, has not seen as high a price hike as other grocery staples like eggs and bacon. On average, a stick of butter will cost you $3.48 — less than 5% more than what it was a year ago, according to BLS data.

The current price of butter is actually 6% less than it was two years ago.

One possible reason? Vendors are using lower butter prices as a promotional tool, Gould says. "Butter is one of those staples that around the holidays really matters," Gould says. "You'll often see promotions around Thanksgiving and Christmas on butter, because it drives people into the store."

Current butter prices probably don't reflect recent increases in production costs, but Gould expects those to hit consumers in the new year. "I was at a conference in Santa Barbara last week, and just a poll of the room showed that their manufacturing costs are up something like 10% to 15%," Gould says. "It's energy. It's labor. It's transportation."

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