If you’re a steak lover, you’ve likely noticed that the cost of slicing into your favorite cut is higher than ever. With the holidays upon us, putting together dinner for the entire extended family may hit American families much harder in the pocketbook as a result. The signs have been mounting for months, so it shouldn’t be much of a surprise.
This past August, according to the Bureau of Labor Statistics, the average retail price for uncooked beef steak reached an all-time high of $7.36 per pound in U.S. cities, up 16.1% from last year. If you’re more of a hamburger person, the average price of ground beef has gone up 13% on the year to $4.36 per pound. Beef roast? Up 17.1% on the year to $5.71 per pound.
This is a big deal because beef is a big deal. The USDA counted nearly 730,000 beef cattle operations in the U.S in 2013. These operations produced 25.8 billion pounds of beef that year, and Americans eat nearly all of it, 25.5 billion pounds. That’s about 80 pounds per person. The economic impact of the beef production industry, measured by farm-gate receipts, is $44 billion. The American Meat Institute, a trade association, puts meat and poultry processing industry employment at nearly half a million people, a combined payroll of more than $19 billion. The total economic impact of the meat and poultry industry, as measured by the AMI, is $864.2 billion, about 6% of GDP.
So when beef prices increase dramatically, people pay attention. Consumers pay attention because they see it every time they go to the grocery store, businesses pay attention to it because they have to decide whether to absorb the cost into their margin or to pass it on to the consumer, and economists pay attention because the industry is just too big and important to ignore.
And it’s not just beef prices that are rising. Meat and poultry prices are up nearly across the board, although more modestly. The chart below shows the consumer price index for beef and other poultry (solid line, in red) compared to the CPI for food prices in general. There is a clear jump over the past year as meat prices have overtaken other foodstuff prices, throwing things off balance.