On the table for Thanksgiving this year? Higher food prices

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(Photo from the Nexstar Media Wire; Source: John Moore/Getty Images)

(CBS MONEYWATCH) — One thing U.S. consumers won’t be giving thanks for on Turkey Day this year: the higher cost of food, and just about everything else amid sharply rising inflation. 

“When you go to the grocery store and it feels more expensive, that’s because it is,” said Veronica Nigh, senior economist at the American Farm Bureau Federation. Food prices are up 3.7% so far in 2021, versus a 20-year average of about 2.4%, she told CBS MoneyWatch. 

As a result, the overall tab for turkey and all the trimmings will cost 4% to 5% more this year than a year ago. According to the Farm Bureau, in 2020 the cost of preparing the holiday feast came to just under $47 (for 10 people or less) — the lowest level since 2010.

This year is a different story. Several factors are combining to drive up food prices, including labor shortages, higher transportation costs and supply-chain disruptions.

“Agriculture is like everybody else — it’s impacted by the supply restraints we’ve seen,” Nigh said. Only about 10% of food costs are related to the actual farming of raw goods, with the remaining 90% involving wages, distribution and other costs, she explained.

Rising food costs are also a simple matter of supply and demand. The nation’s supply of meat held in cold storage for future consumption is lower than usual because of processing plant shutdowns and other pandemic-related disruptions last spring. At the same time, Americans continue to spend more time cooking and eating at home, increasing demand for meat. Such trends could keep food costs elevated for month, according to economists.

The silver lining? Unlike pandemic-fueled shortages of products such as Christmas trees and toilet paper, the Thanksgiving fixings will be in ample supply. As Nigh puts it, “You might pay more for it than you want, but you will be able to find it.”

Turkey hatchery estimates from the U.S. Department of Agriculture point to “a very normal production year for turkeys,” she said. One difference this year is that available birds may be on the larger size, as producers, anticipating increased demand for turkey meat, opted to keep them on feed a little longer. 

“If you can’t raise more turkeys, raise turkeys that are a little fatter,” Nigh said.

It’s not just dinner hosts who’ll take a bigger hit to their wallets. Gas prices have jumped an average of $1.22 over the last 12 months. The national average price for a gallon of gas climbed by six cents over the past week to $3.38, AAA said Monday. Prices at the pump have risen for 27 consecutive days, adding about 20 cents to the cost of a gallon. 

“With the U.S. economy slowly recovering from the depths of the pandemic, demand for gas is robust, but the supply is tight,” an AAA spokesperson stated. “We haven’t seen prices this high since September of 2014.”

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