Even as overall U.S. inflation decreases, frozen vegetable prices have surged, rising 18% over the past year—making them the fastest-growing grocery item according to the June 2023 Consumer Price Index (CPI). Only a few other expenses, such as motor vehicle repair, school meals, and tax return preparation, have seen faster price increases.
This spike is due to multiple factors. Economists and food experts attribute it to high labor and fertilizer costs, shifting immigration patterns, and impacts from the war in Ukraine.
However, the most significant factor has been unusual weather in California, the leading supplier of U.S. fresh fruits and vegetables. Record-breaking rainfall and snowfall this winter led to severe flooding, mudslides, and saturated farmland, which reduced the vegetable supply.
Labor shortages and high costs contribute to the soaring price of frozen veggies.California produces nearly half of the nation’s vegetables and is the sole producer of celery and garlic, making its agricultural challenges particularly impactful.
The war in Ukraine has exacerbated the problem by disrupting the supply of key commodities like wheat, corn, and soy, which in turn raises costs for vegetables as farmers prioritize these more lucrative crops. Additionally, high costs for cold storage, fertilizers, and labor also contribute to rising vegetable prices.
The labor market adds another layer of complexity. Many agricultural workers are foreign-born, primarily from Mexico, and reduced migration from Mexico and labor shortages have driven up wages. U.S. labor costs have surged, and many farm workers are leaving agriculture for better opportunities in a tight job market.
The interplay of extreme weather, geopolitical events, labor market issues, and ongoing pandemic-related disruptions are expected to keep food prices volatile and high for the foreseeable future.