Factors affecting recent food price inflation in the United States

Beginning in mid-2021, U.S. food prices surged at the fastest pace in decades, due to pandemic-related supply chain and labor shortages, rising transportation costs and wages, food commodity and fertilizer shocks resulting from Russia's invasion of Ukraine, and perhaps demand-side effects of recent monetary and fiscal stimulus. We decompose the path of domestic food prices into explanatory factors, grouped by supply or demand orientation. Our findings indicate that although supply-side factors explain most of the observed price changes, the demand-side factors we studied—particularly the money supply—have a stronger correlation with recent food price increases than they have, historically.