By Heather Hennerich, Public Affairs Staff
From meals out or at home to surf-and-turf prices, the St. Louis Fed’s FRED Blog has been chronicling how the COVID-19 pandemic and efforts to control its spread have affected what U.S. consumers eat and drink, and how much they pay for it.
The blog writers use the St. Louis Fed’s online economic data tool, FRED, to show consumers’ changing habits and consumables’ changing prices.
In March, social distancing switched consumer demand for restaurants and bars—almost dollar for dollar—to food and beverage stores, the FRED Blog pointed out in an April 23 post.
Before that, the data show fairly steady growth of retail sales at restaurants and bars (the black line) catching up to retail sales at food and beverage stores (the red line) in August 2018, according to the post, which was suggested by Diego Mendez-Carbajo, senior economic education specialist.
The post had some notes about the data, including:
Sales for restaurants have gone up and those for food and beverage stores have gone down since March, as is shown in the above chart.
A June 29 FRED Blog post looked at retail sales for beer, wine and liquor stores in particular; these sales also spiked in March.
This suggests that consumers were at least in part shifting from consumption in restaurants and bars to consumption at home, according to the post, which was suggested by Christian Zimmermann, assistant vice president of research information services.
What was not so clear—why prices didn’t shoot up with demand. Prices paid by consumers did rise, as shown by the CPI, but not as much as the prices paid by retailers, as shown by the producer price index, or PPI. (The PPI, which is also put out by the Bureau of Labor Statistics, measures the average change over time in the prices domestic producers receive for their goods and services.)
In other words, the data suggest retailers didn’t pass on their full cost increases to customers, according to the blog post.
Why would retailers reduce their profit margins despite the increase in demand? One theory in the blog post: Price gouging in times of distress can damage a business’s reputation and is even illegal in some states.
The sharp rise in demand also might have been seen as temporary, “so retailers may have been willing to forgo a large amount of quick profit to reinforce better long-term prospects with their regular customers,” the post said.
Pork, beef and chicken prices have been rising strongly, while fish prices have been declining, thanks to supply and demand shocks, respectively, according to an Aug. 17 FRED Blog post.
(A supply shock is an unexpected event that changes the aggregate, or total, supply of goods and services in a market, up or down, as explained in a March 25 Open Vault blog post. A demand shock affects aggregate demand; like a supply shock, it can also affect prices.)
The chart above uses U.S. consumer price data from the Bureau of Labor Statistics to show the percent change from a year earlier in prices for those meats. Year-over-year percent changes were used to account for any seasonal patterns, according to the FRED Blog post, which also was suggested by Mendez-Carbajo.
As supplies have gone down, the average price of pork chops has grown by double digits year over year since April, the post noted. (The chart in the post ends in June, but that pattern continued for July and August, as shown in the chart above.) Sirloin steak and chicken prices have also moved up in recent months.
The Economic Research Service at the U.S. Department of Agriculture (USDA)attributed the decrease in meat output to COVID-19 outbreaks among workers at several meat-packing facilities, as noted in the post.
But those supplies are recovering. Pork processors, for example, were operating at 72% of capacity in May, but rebounded to 90.3% in June, according to an August livestock, dairy and poultry outlook report from the USDA research service.
On the other end of the price scale are shrimp and fish: The global price of fish has decreased on a year-over-year basis since March 2020, and the global price of shrimp has been down since May, according to the above FRED chart created for the post.
The blog post discussed how these price declines are due to demand shocks. The decreased demand for fishery products in the hospitality sector, which has been disrupted during the COVID-19 pandemic, has played a role in lowering global prices, according to a report from the Food and Agriculture Organization of the United Nations cited in the blog post.
Editor's Note: This post was updated to use an ALFRED chart for the price of fish and shrimp. The ALFRED chart shows the data as of the time this post was written. The data since have been revised. For the latest data, see this FRED chart.