Getting Worse: Grocery Store Prices to Skyrocket Even Higher

Food prices in the U.S. may get worse in the coming months as European Union countries predict a dismal wheat harvest on top of the loss in Ukraine’s wheat exports, The Wall Street Journal reported on Thursday.

The EU may produce 5% less wheat than 2021 because of dry weather, agriculture consulting firm Strategie Grains told the WSJ.

“Combined with spells of extreme heat, this weather took a negative toll on the condition of all cereal crops in Europe,” the firm told the outlet.

Russia, Australia, Canada and the U.S. provide the bulk of wheat exports to the rest of the world, according to 2021 data analyzed by World’s Top Exports. And while the U.S. is predicting a better-than-usual harvest at 18% above the 2021-2022 yield, according to a fact sheet from the U.S. Department of Agriculture, prices continue to rise.

Wheat futures stocks peaked in March, but prices year-over-year remain high, according to the WSJ. The Chicago Exchange put wheat at $10.5 per bushel on Friday, up from $6.21 on June 10, 2021.

The price of groceries for Americans increased 11.9% over the last year, according to the Consumer Price Index report released Friday.

The Biden administration has taken steps, including allowing farmers to plant on environmentally protected lands, to boost U.S. grain supplies.

“Ukraine and Russia are still underpinning the market movements, and we have seen huge volatility in prices,” Megan Hesketh, a senior analyst at the Agriculture and Horticulture Development Board, told the WSJ.

Ukraine, one of the world’s largest grain exporters, faces a significant decline in production as the war with Russia tears up the countryside and disrupts the agricultural industry. It has also banned exports of key crops like wheat and oats to stave off a looming starvation crisis in cities Russia has besieged.

French agricultural office FranceAgriMer attributed declining non-EU exports for the third month in a row to high prices inflated by the war in Ukraine, European Supermarket Magazine reported on Friday. France is an EU member and top wheat exporter.

Other key exporters, like Russia and India, have also banned exports to some or all destinations.