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Tight Labor Markets Have Been a Key Contributor to High Food Inflation

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Abstract

Food inflation remains higher than measures of overall inflation, and labor markets have been tight. We find that processed food products have driven recent increases in grocery prices, and we argue that labor market tightness affects the prices of these labor-intensive products in particular through increases in production and distribution costs. Food inflation at grocery stores could remain elevated if price pressures on the supply side persist and demand for food at home remains strong.

Suggested Citation

  • Cortney Cowley & Ty Kreitman & Francisco Scott, 2023. "Tight Labor Markets Have Been a Key Contributor to High Food Inflation," Economic Bulletin, Federal Reserve Bank of Kansas City, pages 1-4, April.
    • Handle: RePEc:fip:fedkeb:96082
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    File URL: https://www.kansascityfed.org/Economic%20Bulletin/documents/9493/EconomicBulletin23ScottCowleyKreitman0419.pdf
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    References listed on IDEAS

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    1. Brent Bundick & Andrew Lee Smith, 2023. "A Tight Labor Market Could Keep Rent Inflation Elevated," Economic Bulletin, Federal Reserve Bank of Kansas City, issue March 1st, pages 1-4, March.
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    Cited by:

    1. Burns, Christopher B. & Prager, Daniel L., 2024. "Do agricultural swaps co-move with equity markets? Evidence from the COVID-19 crisis," Journal of Commodity Markets, Elsevier, vol. 34(C).
    2. Kaori Ochi, 2026. "Understanding Post-Pandemic Inflation in Japan and the U.S.: A Narrative Sign Restriction Approach," Bank of Japan Working Paper Series 26-E-4, Bank of Japan.
    3. Cortney Cowley & Jacob Dice & Amaze Lusompa & David Rodziewicz & Francisco Scott, 2024. "The Passthrough of Agricultural Commodity Prices to Food Prices," Research Working Paper RWP 24-16, Federal Reserve Bank of Kansas City, revised 29 Oct 2025.

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    More about this item

    Keywords

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    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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