The consumer price index for April confirms what most Americans already know. Prices are going up especially for basics like food.
Food price inflation, on a 12-month unadjusted basis, is running at 2.4% and was up 0.4% in April, the largest increase since October 2020. Overall inflation is running at 4.2% the largest 12-month increase since a 4.9% increase for the period ending September 2008.
"Any animal that you eat is eating grains, and it's eating corn, soybeans, or soybean meal, and perhaps even some wheat," said Sal Gilbertie the CEO and president of Teucrium Funds, the company's ETFs track prices for corn, soybeans and wheat.
"We see the prices of these grains go as high as they've been literally since 2012, 2013," Gilbertie told Yahoo Finance Live.
The Teucrium (CORN) fund is up 43% year-to-date, (SOYB) fund is up 24% and (WEAT) is up 16%. Gilbertie said the increase in grain prices is feeding a surge in the prices paid at the grocery store.
Food industry manufacturers blame increasing chicken prices on the national labor shortage as well as an increase in demand. But, the Bloomberg Agriculture Spot Index, which tracks key farm products, saw prices spike at the end of April hitting their highest level in nine years. That surge is also driving up prices for bread and meat.
Crop failures in China add to the inflationary pressure, as the Chinese purchase dwindling stocks of corn and soybean, Gilbertie said. "Our global supplies of grains are shrinking. And when you look at day's supply, we are down towards the leftover excess day's supply numbers that we were back in 2013," and that is driving up prices.
'At least a year maybe two'
Dana Peterson, the Conference Board Chief economist, told Yahoo Finance Live, "While some of these price increases may fade with the pandemic, some may not."
Gilbertie said the high prices for grain and food will persist, "at least a year, maybe two years," until future harvests replenish stocks and grain prices fall. And there is no guarantee they will.
The maker of Cheerios, General Mills (GIS), plans to raise prices to cover some of its increased costs, according to The Wall Street Journal. General Mills CEO Jeff Harmening told the Journal, "Our competitors and retailers are facing the same thing we are."
Hormel Foods (HRL) raised prices in February for its Jennie-O ground turkey and Skippy peanut butter to balance the higher prices it pays for grain.
Hormel said the price of cornmeal rose 40% while soybean meal rose 15% in the last quarter with more increases expected. During Hormel's Q1 earnings call, Chairman and CEO Jim Snee said, "We have taken price increases across our portfolio and expect those to be effective late in the second quarter."
The Federal Reserve recently acknowledged, "inflation has risen, largely reflecting transitory factors." But Federal Reserve Bank of Cleveland President Loretta Mester told Yahoo Finance, “Seeing inflation move up to two and somewhat above 2 [percent] is not a problem.”
Gilbertie disagrees, "I think their view that it will be a transient inflation is false." He worries the Fed, "is under estimating the impact in terms of the severity," or the pain Americans experience when they pay more to buy food.
Adam Shapiro is co-anchor of Yahoo Finance Live 3pm to 5pm. Follow him on Twitter @Ajshaps
Stifel's Barry Bannister on markets: 'We see a 10% correction'
Why Southwest CEO Gary Kelly is 'euphoric' about airline recovery
Airlines won't call travelers' COVID-19 vaccination proof 'vaccine passports'
Delta posts wider-than-expected Q1 loss but CEO Bastian sees 'pathway to profitability' by June
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn,YouTube, and reddit