Soaring US 'Baking Inflation'... "Holes in Wallets"

Eggs and Margarine Up 50%, Flour Up 24.9%... School Meal Costs Triple

[Asia Economy Reporter Kwon Haeyoung] In the United States, prices of baking ingredients such as eggs, butter, and flour have surged, causing 'baking inflation' to soar. Inflation, which was ignited by the Ukraine war, has led to a sharp rise in food and dining costs, making life increasingly difficult for the American middle class.

On the 26th (local time), The Wall Street Journal (WSJ) reported, "With U.S. inflation reaching its highest level in 40 years, baking a cake has become considerably expensive this year."

The U.S. Consumer Price Index (CPI) has risen sharply this year. In June, it increased by 9.1% compared to the previous year, marking the highest level since 1981. Although the growth rate slowed to 7.1% in November, the high inflation trend is expected to continue for the time being.

The rise in food and dining costs was particularly notable. According to the Department of Labor statistics, many of the 12 items with the highest price increases over the past year were baking ingredients such as eggs, butter, and flour. Last month, prices of eggs and margarine jumped 50% year-over-year, while flour and baking mixes rose 24.9%. Overall grocery prices increased by 12% compared to a year ago, the highest level since August 1979 (13.5%) when the second oil shock hit the world.

The items with the highest price increases over the past year were also counted as school meals and were related to food. Schools that had provided free lunch meals at the beginning of the COVID-19 pandemic began charging fees, causing school meal prices to triple.

Dining out costs also surged dramatically. Restaurant prices for sit-down meals have risen more than 9% compared to a year ago over the past few months. Considering that the annual increase rate was 2.7% over the 20 years before the pandemic, the rise in dining costs was very significant. Prices of alcoholic beverages at bars and restaurants also jumped 7.1% in November, marking the largest increase since 1991.

Since groceries and dining out are difficult to cut back on and account for a larger share of total expenses for lower-income households, life for ordinary Americans has become very tough. The Wall Street Journal reported, "Groceries have punched a big hole in consumers' wallets this year."

Amid the worst inflation, most other items besides food also saw price increases. Airfare rose 36% compared to a year ago, approaching the record high increase of 40% in September and October 1980. New car purchase costs rose more than 8%, and car maintenance expenses also increased significantly. Gasoline prices surged 10%, repair costs 15%, tires 10%, and car insurance premiums 13%. Clothing alterations and rentals, as well as shoe repair costs, rose 14.1%, and barber costs increased 6.8%.

On the other hand, some items saw slight price increases or decreases. Last month, meat prices rose only 1.1% compared to a year ago, down from a 16% increase the previous year. TV prices dropped 17%, while sports event tickets and vehicle rental costs fell 7.2% and 6%, respectively.

The Wall Street Journal analyzed, "Post-pandemic consumer spending and government stimulus measures overlapped with supply chain disruptions caused by COVID-19," adding, "This year, Russia's invasion of Ukraine worsened prices of energy, food, and raw materials." It further noted, "Labor demand outpacing supply, triggering wage increases, was another cause of inflation."