CPI read: Beef prices spike amid drought, tariff, and inventory issues

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The Consumer Price Index report for September indicated a 3.0% year-over-year increase, which fell below the expectation of economists and was slightly below the pace seen in August.

The closely watched food category was up 3.1% year-over-year in October, with food away from home up 3.7% Y/Y during the month and food at home up 2.7% Y/Y.

The food category with the biggest jump in prices compared to a year ago was beef. Uncooked ground beef (+12.9%), uncooked beef roasts (+18.4%), and uncooked beef steaks (16.6%) all showed elevated prices. The overall beef category saw a 1.2% increase in prices in September on a month-to-month comparison.

Beef prices in the U.S. are currently at record levels due to a combination of supply shortages driven by long-term droughts, high feed costs, reduced cattle inventories, and strong consumer demand for beef. Notably, the national cattle herd is at its lowest level in decades. Severe droughts over the last five years have forced ranchers to reduce breeding herds as grazing lands and feed became scarce. The replenishment cycle is expected to take several years.

Analysts note that tariffs on imports and trade disruptions have limited foreign supply, which has also contributed to higher beef prices in the U.S.

A broad list of companies impacted by beef prices includes JBS N.V. (JBS [https://seekingalpha.com/symbol/JBS]), Kroger (KR [https://seekingalpha.com/symbol/KR]), Albertsons (ACI [https://seekingalpha.com/symbol/ACI]), Walmart (WMT [https://seekingalpha.com/symbol/WMT]), Tyson Foods (TSN [https://seekingalpha.com/symbol/TSN]), Hormel (HRL [https://seekingalpha.com/symbol/HRL]), Pilgrim's Pride (PPC [https://seekingalpha.com/symbol/PPC]), Kraft Heinz (KHC [https://seekingalpha.com/symbol/KHC]), Domino's Pizza (DPZ [https://seekingalpha.com/symbol/DPZ]), Texas Roadhouse (TXRH [https://seekingalpha.com/symbol/TXRH]), Shake Shack (SHAK [https://seekingalpha.com/symbol/SHAK]), McDonald's (MCD [https://seekingalpha.com/symbol/MCD]), Wendy's (WEN [https://seekingalpha.com/symbol/WEN]), Restaurant Brands International (QSR [https://seekingalpha.com/symbol/QSR]), and Beyond Meat (BYND [https://seekingalpha.com/symbol/BYND]).

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