Summer is grilling season, especially around the Fourth of July Holiday. RaboBank’s RaboResearch North America found out it’s costing Americans more money to grill this year. Lance Zimmerman, a senior animal protein analyst, says the cost has jumped in the last five years.
Zimmerman says; “We’re sitting here today where the cost to provide a barbecue of just traditional Fourth of July fare for 10 people would run you about $97 right now. And if you think about that in context, where we were five years ago is about $73. And so, it’s increased 31 percent over the last four years, even increasing just modestly compared to where we were last year at this time.”
He talks about where some of the biggest price increases occurred; “If you look at that basket of goods, some of the biggest items that were increasing were soda, hamburger buns, potato chips, all would have reigned as some of the top items with aggressive year-over-year increases in that four-year period. But then you’d also have items like ground beef and chicken breasts that would show some sizable increases as well. And a lot of it reflects what we see going on in the general commodity markets. Specifically with wheat, as you think about what’s going on there, obviously, we’re in the middle of wheat harvest through the Central Plains right now. It’s another crop that’s had a lot of challenges thrown at it with drought. But not only has the domestic supply situation been murky, the global one has been a challenge as well, with everything going on in Russia and Ukraine creating a much tighter global supply dynamic.”
The cost of protein to put on the grill still takes up a big part of the total cost of a barbecue. “Beef and chicken make up a pretty sizable amount of that total spend, even if their year-over-year increase hasn’t been as aggressive in some of those other areas,” Zimmerman says. And so, beef is, in that index, about 14 percent of the cost. Chicken breast is about 11 percent. Ironically, we didn’t forget about beverages. Beer is 27 percent of what that cost is in that grocery basket. But as you think about the animal protein component, you know we do have an interesting dynamic at play. We are seeing items like pork and chicken start to correct and see their prices turn lower, as they’ve been steadily higher since the pandemic.”
Zimmerman says the biggest surprise is how much demand is still there even as the prices rose over the last five years.
Zimmerman; “As we’ve come into 2023, those year-over-year increases have started to narrow to the point where now, I think the consumer sees the light at the end of the tunnel, and the shock of those aggressive year-over-year price increases is starting to narrow, and pass. And as a result, the consumer has more confidence and less uncertainty about their day-to-day financial situation. And I think as we get to that point, the consumer is much more willing to spend again on small thrills, on small benefits to themselves. I think the grocery basket for a barbecue during the summer fits that dynamic.”
