| Fire up the grill: This weekend is the unofficial start of summer in the US. But don’t be surprised if the grocery bill for your family’s picnic is higher this year, writes Businessweek’s Deena Shanker. Plus: AI can help you catch up with work after the holiday, and Coach bags reach a new generation. If this email was forwarded to you, click here to sign up. With Memorial Day weekend upon us, we’ve arrived at hands-down my favorite season. Ice cream on the beach, summer produce, cocktails on a sunny porch—it doesn’t get much better than that. (Somehow trade wars, encroaching authoritarianism and even a looming climate apocalypse all seem less threatening when the weather is good.) But I’ve got some bad news: Like so much else, the price of a cookout is expected to go up this summer, by an estimated 4.21%, according to Rabobank, which focuses on the food and agriculture sector. You can’t even blame tariffs, says Tom Bailey, a senior consumer foods analyst at the bank, because 90% of the typical cookout menu is sourced domestically. The reasons behind the cost increases, like the food, are mostly homegrown.  Prices are higher for ground beef to make burgers. Photographer: Spencer Platt/Getty Images For its calculation, Rabobank’s menu included, per person, one cheeseburger with lettuce and tomato; one chicken sandwich with lettuce, tomato and a slice of cheese; two handfuls of chips; two beers; a soda; and some ice cream. Each ingredient comes with its own set of price-increasing explanations: Ground beef is expected to be up 6.44% thanks to a record low cattle herd coinciding with high demand. Tomatoes could rise almost 17% because the US—to the delight of Florida tomato growers—withdrew from a tomato-related trade agreement with Mexico. Beer, on the other hand, will be up only about 3% for a number of reasons, including that some formerly foreign beers are now made domestically, including Anheuser-Busch InBev’s Stella Artois, which started US production in 2021, says James Watson, a beverage analyst at the bank. Bailey says food inflation is driven by “structural pressures” that have been building for years: In 2021 global trade flows changed thanks to the Covid-19 pandemic and geopolitical tensions. Many food companies learned that just-in-time shipping could be risky and decided they’d accept some higher ingredient costs to ensure the ingredients actually arrive. More recently, Bailey says the Make America Healthy Again movement, led by Health and Human Services Secretary Robert F. Kennedy, is another force that could change the way food is made, making it more expensive if new regulations are enacted. Prices that went up over the past several years aren’t likely to come down, says Rob Dongoski, the global lead for food and agribusiness at consulting firm Kearney, but companies can see that consumers are feeling the stress and hope to just stay in line with inflation. Still, price spikes on ingredients will likely filter down to the consumer eventually. “It’s less tariffs, just more of the costs of inputs,” he says, listing beef, sugar, flour and dairy as examples. Americans have long enjoyed spending very little on food consumed at home; they currently average just 6.8% of their income on such meals, the lowest share of any country, according to the US Department of Agriculture. (It should be noted: We also have a shorter life expectancy and some of the highest obesity rates of most developed countries, as Bloomberg News recently wrote.) Now, Bailey says, “The question is, are we at an inflection point in the food system that things are changing?” He can’t say yet for sure. “There’s just a lot of what-ifs right now. There’s a lot of change, and we’re not sure exactly how things are going to line up.” |
