Increase in food prices hurting SoCal restaurants and food distributors: 'I am more stressed out'

Data from the U.S. Bureau of Labor Statistics shows the consumer price index for food increased 5.3% in October 2021.
LOS ANGELES (KABC) -- You may have noticed the rise in food prices during your trip to the grocery store, and it's not only hurting your pockets, but it's also impacting local businesses and food distributors.

Data from the U.S. Bureau of Labor Statistics shows the consumer price index for food increased 5.3% in October 2021 compared to October 2020.



Some foods have increased more than others since last year. The price of meat, fish and eggs went up 11.9% from October 2020 to October 2021. Meanwhile, the cost of non-alcoholic drinks increased 4.5%, fruits and vegetables increased 3%, and the price of dairy increased 1.8%.



With the bump in prices, food distributors like University Foods in L.A. say they're feeling the impact tremendously.

"I am more stressed out companywide than during the pandemic, just trying to fulfill everyone's needs, because if they don't have product they can't sell anything," said President of University Foods Dean Schauer.

Schauer said University Foods services more than 800 restaurants, schools and hotels across the L.A. area. He said next year, inflation could be even more challenging for the food industry.

"I think it's going to be very challenging for everybody in 2022," said Schauer, who believes food prices could start going down by the third quarter of next year. "The reality is they all had a nice [Paycheck Protection Program] bump in 2021, and it probably saved a lot of them."

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Prices of food, gas, cars and more are skyrocketing as the consumer price index soared 6.2% from a year ago.



Meanwhile, the owner of Tallyrand Restaurant in Burbank told Eyewitness News food prices from the distributors she works with have gone through the roof since the start of the pandemic and said she's going to have to charge her customers more.

"Turkeys, everything ... potatoes, to-go boxes, everything involved in the dinner has gone through the roof," said Karen Ross. "We raised our prices a little bit. We're charging $27.95 per plate, which is still a great bargain for what we're providing, but I think everywhere you go, you're going to see higher prices across the board for whatever you're picking up."

What's behind the price spike?

It's partly the consequence of very good news. The world economy - and America's in particular - rebounded with unexpected speed and strength from last year's brief but intense recession. It was a result of super-low interest rates, massive government spending and, eventually, the broad rollout of vaccines that allowed more of the economy to reopen.

The swiftness of the rebound caught businesses off guard. A year and a half ago, they were bracing for the worst - laying off workers, letting shelves and warehouses go bare, reducing investment and factory output.

And energy companies did the same: They cut production of oil and gas as demand for transportation fuels plummeted. Once demand came roaring back, they were unprepared. They found themselves scrambling to call back workers and buy enough to fill customer orders. Ports and freight yards couldn't handle the traffic. Countries competed over boatloads of overpriced liquid natural gas. Periodic COVID-19 outbreaks shut down Asian ports and factories. Global supply chains broke down.

As costs rose, many businesses found that they could pass the burden along to consumers in the form of higher prices. In the meantime, many families had banked their government relief checks and built up their savings. Some critics also blamed Biden's $1.9 trillion emergency aid package for overheating the economy and contributing to inflation pressures.

Economists are divided over how long the inflation spike will last. Gus Faucher, chief economist at PNC Financial, predicts that inflationary pressures will ease as supply chains sort themselves out.

"I expect to see inflation slow in 2022,'' he said.



The Associated Press contributed to this report.
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