Economist expects grocery inflation to slow
An ag economist expects recent inflation within grocery stores to slow down over the next several months. The president of private consulting group Agricultural Prospects, Robert Young, tells Brownfield much of the accelerated inflation is because of consumer spending returning following the pandemic and increasing because of government stimulus.
“We might go through a couple, three maybe months of a little bit more price acceleration than we’re used to,” he said. “But I think by the fourth quarter [into] 2021 I would expect to see those price increases to moderate.”
He said high prices are their own solution and will likely cause increased production which will reverse prices. But Young said in the long-term, across all goods, he’s interested to see if increased labor cost drives a higher round of inflation.
“You’d think with unemployment being still as high as it is, why would you necessarily expect labor costs to go up,” Young said. ”But, you’re sure hearing a lot of conversation about folks having to pay $15 an hour to get labor.”
Young said fear of continued inflation could cause interest rates to rise as lenders look for greater returns to offset a potential inflation increase.