Rising costs of groceries could hurt Democrats in the midterm elections, where they have to defend slim majorities in the House and Senate.
Goldman Sachs doesn't expect Americans to get relief from inflated grocery prices this year as the Wall Street investment and banking firm is projecting the cost of groceries to increase by another 5 or 6 percent in 2022.
That increase can add up at the checkout line, especially for people who have been struggling financially during the pandemic. Americans spending more at the grocery store could hinder economic growth because it leaves them with less disposable income and spell trouble forThe Biden administration has attempted to write off the inflation as transitory, but prices for goods across many sectors remain elevated months after they started to rise.
In a report to clients on Monday, Goldman Sachs economists wrote that the stage was"set for further substantial increases in retail food prices this year," according toBusiness. The company partially attributed the increase in retail prices to the"soaring costs" of some farming supplies and products and prices could go higher if companies"pass along a greater share" of those input costs to consumers.
Supply-chain issues due to the COVID-19 pandemic are also likely contributing to the rising costs. While 6 percent may not seem like a significant amount, food costs have risen by about 11 percent since the start of the pandemic and food prices in 2021 had the biggest year-over-year increase since 2008, according to the Bureau of Labor Statistics.
Goldman Sachs predicted grocery retail prices could rise 5 or 6 percent in 2022, a"substantial increase." Customers shop for produce at a supermarket on June 10 in Chicago.
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