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Inflation: Food analyst breaks down the cost of a 4th of July barbecue

Wells Fargo Food and Agribusiness Industry Advisory Group Sector Analyst Karol Aure-Flynn joins Yahoo Finance Live to break down Wells Fargo’s July 4th food inflation report.

Video Transcript

- Consumers feeling the pinch in their wallets as food prices climb, while Americans gear up for this year's 4th-of-July celebrations. 4th-of-July food costs, they're up 11% this year, according to Wells Fargo food and agribusiness industry advisors. Here to break this all down with some tips to help rein in costs, we've got Karol Flynn, who is Wells Fargo food and agribusiness industry advisory group sector analyst. Great to have you here with us. First can you just take us into how much people should expect to spend more coming up to this holiday?

KAROL AURE-FLYNN: Well, price inflation at the food, either retail, at your restaurant, is real. It's a pain point. We were seeing end of last year and the first quarter, 8.3%, 8.5%. But when we put together this little menu for 10, we were looking at 10 and 1/2% more. Certainly details matter, proteins a big part of that. But there's still ways to make this an affordable holiday and make this meal affordable.

- Yeah, proteins, as you mentioned in particular, really stick out, in aggregate, what, up 12% to 15%, I believe is what we were looking at. But some of the proteins are not as expensive, haven't gone up as much as some of the others for that-- so that's what you're looking for, recommending for people maybe to trade down to.

KAROL AURE-FLYNN: Well, the thing here is for shoppers to look for the relative value. And so you think about what your options are protein wise. You know, chicken producers have been dealing with some disease issues. So the supply is down. And with demand up, then you're going to still see prices.

The beef herd issue, it's a really slow cycle. So for beef producers in this country to be able to respond to higher prices will take a little bit. That's why pork is a relative value in this situation. And shrimp is a really interesting one because shrimp was so impacted by the COVID shutdowns that supply is really good. And it turns out that, as we all know, with some geopolitical issues and currency valuation issues that shrimp, mostly imported into this country, turns out to be a relative value. So we're looking for shrimp on the barbie, pork tacos, my favorite, shrimp tacos.

- Look, I think we both join you in that aspect-- get some shrimp tacos popping off on 4th of July. But you know, I think for some of the companies, too, as they're navigating through both the supply chain crunch that you laid out and then additionally, where consumers are saying, you know what? We're willing to opt out of a certain purchase. Where can consumers find some type of reprieve at this point in time?

KAROL AURE-FLYNN: Well, you bring up a good point there too. Don't forget that price inflation has two components. One is the cost inflation part, where the producers, processors, and manufacturers have to pass on some of just really rough waters that they've had to navigate. And the other part is demand.

I think consumers really need to be looking and be mindful of seasonality. I've heard guacamole and avocados mentioned. Look, California producers are just about to get into their very heavy season. We're likely to see some moderation price wise there.

I think the produce department is a great place for some seasonal bargains. And you will also see, if you're mindful and spend-- this is not always my MO. But if you prepare ahead of time, look for retail specials, look for loss leaders. That's where the shoppers are going to find some values.

- And use your freezer, which we've been seeing people do more often, right? Where you can, obviously. One of the surprises in your report-- well, there are a couple of surprises in your report. But one of the interesting thing is when you turn to dessert, that dairy ice cream has been rising in cost. But non-dairy types of desserts, the sorbets of the world, have actually been declining in price. What's been driving that dynamic?

KAROL AURE-FLYNN: Well, any of the dairy components have been really heavily impacted by the feed cost acceleration. So all the feeds-- corn, soybeans, et cetera-- are up 100% over the last price wise, so raw material wise. So we're going to see some dairy increase-- price increases that way. We-- you know, and what's interesting is that dairy department itself has been innovating.

If you look at the dairy case, there are so many non-dairy options. And the dairy industry, the real milk people, have been innovating as well. So there's new products out there. And look for the specials. Look for brands that are trying to get their way into the market.

And one thing we really had fun was with is think about what the homemade alternatives are. 4th of July, who doesn't have that wonderful memory of making ice cream with their grandparents? You know, this may be the time for us to start going back to some old-fashioned options on that front.

- My kids love the homemade popsicles, I have to say, like, putting all that stuff in the blender and then pouring it into the popsicle molds. One more thing I wanted to ask you about was alcohol because that was another of the surprises in your report that beer prices are up 25% year to date. So if you are looking for some frosty beverages for your 4th-of-July barbecue, where can you find some relief?

KAROL AURE-FLYNN: Well, I think we're already starting to see some shoppers not necessarily substitute but look more for that value. Look, the domestic super-premium beer demand is up year over year, which is interesting, versus some of the craft or higher price points. People may be just choosing when they want to spend their money. And that's also we're seeing that in the wine side too. Again, for the non-alcoholic beverage folks, soda pop is up as well, depending on what part of the country you're from, soda or pop. And we'd like to see some homemade lemonade out there.

- Homemade lemonade, I like that as well. All right, Karol, thank you so much. Karol Flynn, Wells Fargo food and agribusiness industry advisory group sector analyst, with some tips for people trying to save money over the coming holiday.