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What’s driving the increase in food prices at groceries and restaurants

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Posted at 2:58 PM, Jul 05, 2021

SALISBURY, Mass. — Many Americans are dealing with sticker shock at the grocery store right now. From milk to coffee, the cost of food seems to keep going up. Restaurants nationwide are also feeling the pinch.

While it may sit beside the water. Not much is cooling off business at The Deck restaurant in Massachusetts these days. But customers emerging from more than a year of COVID-19 are being met with a bit of sticker shock.

“Well, I think everything that is like vacation-related is really expensive,” said Miriam Ozer who visited the restaurant with her son, Eli. “I got a lobster roll the other day and it was like $27 and I was like, ‘oh man.’”

“Talk about something that has a high food cost, you know, I mean, that one is off the charts. But how much can I charge for a lobster roll?” said Mark Audette, owner of The Deck.

Audette has struggled with the rising cost of food.

“When I look at prior years at what my food cost whereas a percentage, much, much higher this year. Some of it we can pass on, some of it we cannot. You know, how much can I charge for a French fry you know?” he said.

Lobster, in particular, is more expensive this season due to limited supply and high demand.

Many consumers are headed back to seafood restaurants and markets for the first time in months. The cost of lobster goes up almost daily, so much so, that they don't even bother writing prices on the menus at The Deck.

“The demand is always there but the pricing is always changing,” said Assistant manager Samantha Quarantiello.

Quarantiello talks to enough customers to know many have their price limit when it comes to that lobster roll.

“It’s about 50/50. Some people are willing to pay and some people are more on the fence about it,” said Quarantiello.

You may not even eat lobster but what’s happening to the price of this shellfish is indicative of much larger market trends.

“We really are seeing some significant rises in food prices,” said Jason Lusk, a food economist.

Lusk sees firsthand at the grocery store how much more everyday items are costing us these days.

What's happening? Grocery prices skyrocketed when the pandemic hit and never really came back down. Feed and grain are also costing farmers more, and those costs end up being passed down to shoppers.

“Demand for meat, fish products has been surprisingly strong,” said Lusk.

Among the most expensive items right now are rice, milk, oranges, and coffee.

Americans, on average, spend about 10% of their income on food.

“It has disproportionate impacts across our economy. Food price increases hit the lower end of the socioeconomic spectrum much harder,” said Lusk. “As the economy is opening back up there’s a lot of money and demand to be spent out there and it gets spent sometimes on lobsters and other high-end lobsters.”

At The Deck, they've had to absorb many increases related to food costs, decreasing their bottom line. That’s not easy after the year we just had.

“I’d rather be busy, have people enjoy what they’re doing than price them out of the market,” said Audette.

One thing keeping restaurants afloat is alcohol sales. Booze hasn't been hit by the same kind of increases as food.