Why inflation hit these 10 points the hardest in 2022

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Inflation has risen in 2022 to levels not seen in four decades.

But the prices of certain items rose faster than others, mostly focused on food, fuel and airline tickets.

Some of these swings were due to external factors beyond general inflationary pressures, such as convoluted supply chains, labor shortages, burgeoning consumer demand and Russia’s invasion of Ukraine.

Here’s a look at the 10 items with the biggest price gains as measured by the annual inflation rate in December. The percentages come from the latest CPI data released on Thursday.

Eating at school: 305.2%

For example, the respective annual inflation rates for groceries and meals out reached 13.5% and 8% in August – theirs highest since 1971 and 1981 respectively.

Russia’s invasion of Ukraine caused an energy supply shock and contributed to higher transportation costs to get food from farm to table. This combines with other factors such as higher labor costs to underpin rapidly rising prices across the food complex.

“Food inflation has been crazy,” said Tim Mahedy, senior economist at KPMG. “We hadn’t seen it [these levels] Consistently for decades.”

Eggs: 59.9%

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Margarine: 43.8%

Heating oil (41.5%) and motor fuels (32.3%)

However, oil prices eased in the second half of the year as fears of a possible recession and associated weakness in oil demand mounted.

Gasoline prices also fell, ending the year down 1.5%. But the prices of other oil products have not fallen as much. Heating oil and other fuels such as diesel ended the year up 41.5% and 32.3%, respectively.

Butter (31.4%) and other dairy products (21.4%)

A decline in global milk production — at major producers like Australia, the European Union and New Zealand — pushed down prices for butter and other dairy products.

The monthly milk production at the main suppliers decreased every month from September 2021 to June 2022, according to to the US Department of Agriculture.

“They were all quite squeezed in terms of the milk supply available,” said Amy Smith, vice president at Advanced Economic Solutions, a consultancy specializing in food economics, of the dairy complex.

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US production was stable, which increased exports to fill the gap. US milk export volume increased by 5% from 2022 to October compared to the same period in 2021, according to the USDA Data. Butter exports grew 43% during that period – resulting in reduced butter supply domestically, economists said

Further are Russia and Ukraine main suppliers of wheat. The war affected grain supplies, raising the price of animal feed and the cost to farmers, economists said.

Butter prices ended 2022 up 31.4%. Other dairy (excluding milk, cheese and ice cream) rose 21.4%.

Air fares: 28.5%

Airline fares rose nearly 29% in 2022 as consumers with plenty of cash unleashed a few years of pent-up wanderlust.

This demand hit the airline industry head first Shortage of pilots, many of whom have been laid off or retired early during the pandemic. jet fuel costs flooded and airlines flew fewer routes. Those factors hurt airline seat availability, economists said.

“People have shifted their spending away from goods to travel, restaurants and ball games,” Zandi said. “Planes were packed.”

However, average prices began to decline in October, November and December.

Lettuce: 24.9%

On transmitted by insects The virus, which was “raging” in California’s Salinas Valley growing region, caused lettuce prices to spike in 2022, said KPMG’s Mahedy.

Dubbed “America’s Salad Bowl,” the region accounts for about half of U.S. lettuce production, according to to Aaron Smith, Professor of Agricultural Economics at the University of California, Davis.

Pundits react to December inflation report

Russia is also the world’s largest exporter of fertilizers. Fertilizer prices – one of the biggest costs for farmers – hit an all-time high in the spring of 2022 after Russia invaded Ukraine. according to to the Federal Reserve Bank of St. Louis.

Vegetable and fruit prices are “significantly affected” by this price increase, Zandi said.

Flour: 23.4%

Ukraine and Russia are important wheat exporters. Nations accounted for 28% of all global exports in 2021, according to to the USDA.

The war led to uncertainty about export volumes and impact on the spring planting season, leading to an increase in prices. Price dynamics affected flour, which is milled from wheat, Smith said.

https://www.cnbc.com/2023/01/13/why-inflation-hit-these-10-items-hardest-in-2022.html Why inflation hit these 10 points the hardest in 2022

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