Restaurants across the country are seeing steeper prices from suppliers in addition to soaring energy prices.
Potato prices increased 6.1 % from June to July 2022 and 21.8% from July 2021.
At some point, many restaurant owners are forced to pass on these higher costs to their customers, who may be less inclined to dine-out. This adds another strain on restaurants, which have struggled to get back on their collective feet since the pandemic.
Potato Prices Jumped 6% in July
In April 2020, the average price of white potatoes was 85 cents per pound, and by July 2022 it reached nearly 93 cents. Wholesale potato prices for 50 pounds of Idaho potatoes on August 18, 2022, ranged between $1-4 according to the United States Department of Agriculture (USDA). Factors contributing to the increase in potato prices include lower supply, high fuel, and increasing labor costs.
The farm share of the retail price of potatoes has fluctuated between 15% and 18%in recent years. Adding further fuel to high potato prices include heatwaves that hit Idaho last year which led to potato yields dropping. Idaho produces a third of all potatoes grown in the country. Potato prices have gone up mainly due to supply shortages. This year tighter supplies of potatoes can see some reprieve as the harvest of new crops of potatoes in Idaho began last week and will continue ramping up.
Despite inflation trickling down from the peak of 9.1% in June to 8.5% in July, food prices remain high across the board. The food index in July increased 10.9% over the last year, the largest 12-month increase since the period ending May 1979. The food away from home index rose 0.7% in July after rising 0.9% in June. The index for limited-service meals increased 0.8% and the index for full-service meals increased 0.6 % over the month.
Supply shortages Fuels Price Hike
The price spikes come from the supply side due to rising costs for labor, machinery, fuel, fertilizer, crop seeds, and other inputs. The increasing production and transportation costs are prompting producers, transporters, wholesalers and retailers to share some of the costs with consumers.
Overall, the food index increased 1.1% in July- the seventh consecutive monthly increase of 0.9% or more. The food at home index rose 1.3% in July as all six major grocery store food group indexes increased. The index for nonalcoholic beverages rose the most, increasing 2.3% as the index for coffee rose 3.5%. The index for other food at home rose 1.8%, as did the index for cereals and bakery products. The index for dairy and related products increased 1.7% over the month. The index for meats, poultry, fish, and eggs rose 0.5% in July after declining in June. The index for fruits and vegetables also increased 0.5% over the month.
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This article, “Potato Prices Rising Affecting Restaurant Owners” was first published on Small Business Trends