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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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    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).

    More about this item

    Keywords

    food prices; labor markets; inflation;
    All these keywords.

    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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