(UNDATED) – Experts say the public should not expect to see grocery prices drop to pre-pandemic levels for several months.
According to the Bureau of Labor Statistics, overall U.S. grocery prices rose 2.6% in April, which represents the biggest one-month increase since 1974.
Purdue’s Krannert School of Management hosted a virtual panel discussion Monday that focused on the COVID-19 pandemic’s effect on the U.S. supply chain.
Associate Dean Ananth Iyer said while some supply chain disruptions have been observed since the start of COVID-19, there are generally 80 to 120 days worth of inventory in various stages of the U.S. supply chain. Most grocery stores usually have two to three weeks worth of food in their inventories at any given time.
“So the good news with this is there is a lot of inventory in the system,” Iyer said.
However, Iyver says supply chain disruptions for several specific products are still affecting prices and selection at most stores, and retailers are still catching up with the initial “shock demand” prompted by the virus and various stay-at-home orders.
Purdue Professor and Agricultural Economist Jayson Lusk says temporary closures of meat processing plants have effected meat prices and supplies.
“Rising prices are the signal that you and I should cut back and try something else,” Lusk said. “It signals that there’s scarcity at the moment.”
Lusk added purchase limits in the meat aisle are another way for retailers to manage scarcity without raising prices even higher.
“By the way, that high price, that’s also the signal that those processors need to get back up and running,” Lusk said. “They’re leaving money on the table by not being able to run at full capacity. There’s the old saying that the cure for high prices is high prices.”
Iyer and Purdue Associate Professor of Management Mohammad Rahman said most retailers are making necessary changes to adjust to the crisis. However, companies will likely have to make changes to keep up with shopper demands beyond coronavirus.
Rahman suggested clothing retailers will have to embrace more online shopping and provide services for those who aren’t comfortable shopping online.
Iyer said grocery stores should continue expanding online order capability for shoppers who want to make fewer trips to the store.
Iyer also predicted more automation in stores in the future, as well as more shopper interest in store cleanliness and the “chain of custody” for the foods they buy.