Prices of many consumer goods continue to follow a Superman-style pattern, “up, up and away,” as the U.S. economy bounces back.
The Consumer Price Index (CPI), a weighted average of prices of a basket of consumer goods and services, climbed 4.2% in April, marking the largest one-month leap since September 2008.
Among items leading the charge are gasoline (up 50%) and food prices (up 2.4%). In fact, with average prices of $3.02 per gallon for gas (up $1.06 from last year) and $3.35 per gallon for diesel (up 86 cents) the last week of May, motorists absorbed the most expensive fuel prices during the recent Memorial Day Weekend since 2014, according to AAA, The Auto Club Group.
“With the increase in travel demand, gas prices are going to be expensive no matter where you fill up,” said Molly Hart, AAA spokesperson.
Meanwhile, food prices in April were 3.8% higher for food away from home and 1.2% higher for food at home compared to the same time last year during the height of the pandemic, USDA reported.
Fresh fruit prices exhibited the largest increase so far this year (4.2%). Pork prices increased another 2.4% while beef and veal edged up 1.4% so far this year, driven by high feed costs and strong international demand.
Bob Young of Agricultural Prospects believes labor costs are likely to be the driving factor for inflation moving forward, given the service nature of the economy.
Along with higher food and fuel prices, those in farm country also feel the pinch from higher feed and input costs, among widespread inflation.
But higher prices aren’t scaring away bidders at farmland auctions, according to Randy Dickhut, senior vice president of real estate operations at Farmers National Company.
“Competitive bidding among interested buyers is really pushing land prices right now,” Dickhut said. “Farmland sales prices are up 5 to 15% in the past six months, with most of the increase coming since the first of the year.”
Individual investors, both first-time and experienced buyers, are stepping into the land market as they search for a safe, long-term real estate investment in a low interest rate environment, he noted. It’s leading to demand for good farmland outstripping the supply of farms.
“At Farmers National Company auctions, we are seeing competitive bidding push prices for good cropland to levels approaching 2014 values,” Dickhut said.
One sales manager for Farmers National reported cropland values jumped 13% in Iowa and 10% in Illinois since January.
The Federal Reserve Bank of Chicago reported first quarter farmland values were 7% higher in its district compared to the same time last year.