![grocery store checkout conveyer belt supermarket cashier grocery shopping](https://cdn.businessinsider.nl/wp-content/uploads/2021/06/60cb450820bd1300181c6c50.jpg)
- Foods is getting more expensive at grocery stores and restaurants.
- Some companies are raising prices, while others are selling smaller quantities for the same price.
- Supply-chain shortages and poor weather are helping drive higher commodity costs.
- See more stories on Insider's business page.
Food prices are surging in grocery stores as well as on restaurant menus.
Last week, Chipotle hiked prices for menu items by about 4%, as the cost of labor and ingredients continues to rise amidst a spike in demand. Red Robin and Cracker Barrel have also increased prices by about 3%, The Wall Street Journal reported. The chains may be forced to further hike prices if commodity costs continue to inflate.
In May, US consumer prices hit their highest level in 13 years, jumping 5% from the previous year, as the cost of meat products and baked goods led the surge in food prices, according to the US Department of Labor.
"We're in a period of unprecedented commodity inflation," Unilever CEO Alan Jope told investors on Monday.
As a result of increased product costs, some companies including Unilever have begun selling products at the same cost, but in smaller quantities.
Even companies that cater to more frugal budgets have been forced to hike prices. Dollar Tree CEO Michael Witynski said in May that the company has struggled to keep prices low.
Why are food prices surging?
Food prices are rising in tandem with a broader inflation trend in the US. While vehicle and fuel costs have led the surge in consumer prices, food prices have also risen as increased demand meets supply-chain snags. Key commodities have become increasingly difficult to obtain due to shipping delays, the national labor shortage, and severe droughts in key countries.
A global shipping-container shortage - which has about 5.5% of all freighters waiting weeks outside of ports to unload, including several key ports in southern California - has made it difficult to transport goods. The delays have put transportation costs at a premium, as companies compete for limited space on container ships and delivery trucks. Overseas transportation costs between Asia and the US have surged about 250% higher from this time last year, according to online freight marketplace Freightos.
Home Depot has even begun chartering its own container ships in an attempt to side-step rising coats and bring its products into the US faster.
![shipping containers](https://cdn.businessinsider.nl/wp-content/uploads/2021/06/60b7df8e02ac410018f93ef0.jpg)
Niels Wenstedt/BSR Agency/Getty Images
The US labor shortage is also hampering production and transportation, from a truck-driver shortage to restaurants and grocery stores scrambling to find workers. Many companies, including Chipotle and McDonalds, have hiked worker pay, while other companies have provided additional incentives to lure employees back to work. One Jersey Mike's in California is offering up to $10,000 in hiring bonuses.
Major droughts in countries like Brazil and Argentina are also driving up prices for corn, coffee, and soybeans. Last month, Reuters reported Brazil was facing its worst drought in 91 years. A "megadrought" in California - the state responsible for over 25% of the nation's food supply - is also expected to have some impact on food prices in the coming months.
Meat prices surged last week due to a ransomware attack on JBS, a supplier that processes about 20-25% of the nation's beef, chicken, and pork products.
Consumer prices are at a 13-year-high, but they're showing no signs of flagging. Executives from General Mills and Campbell Soup Company have warned they may be forced to raise prices further if supply-chain issues continue.
A Campbell spokesperson told Insider the entire food industry was experiencing inflation. "Campbell has a variety of tools to offset the inflationary environment, including pricing actions across most of our portfolio to reflect the broad-based increases in input costs."
As companies continue to hike prices, experts say prices will only even out when the shipping crisis abates, but no one knows how long the upheaval will last.