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Snapshot: Who Invited Inflation to the BBQ?

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This year has seen some of the strongest inflation forces in decades, touching everything from transportation to energy to your favorite summer BBQ meal. While the price of tomatoes may not have changed much, you can expect to feel inflation’s impact when stocking up on meat for your next cookout. 

This brings up two important questions.

  1. Why are some prices going up much more than others? The answer is complicated. Let’s take bacon as an example. Here are just some of the factors (supply and demand) driving up the price right now:
    • Reductions in the pig supply during the early days of Covid shutdowns.
    • Pending California laws that require pig farms who want to sell in their state to build larger, more humane facilities. 
    • Labor challenges and higher labor costs that are affecting many industries.
    • The re-emergence of African Swine Fever in some parts of the world.
    • The health and diet community’s growing support of our bacon-loving habits (Keto, etc.).
    • Higher demand by China’s expanding middle class. 
  2. Is the end in sight? 

Not all prices are rising at the same rate, but the inflation that started in energy and food costs has become more broad-based over time. This leads our Goldman Sachs Asset Management colleagues to think that inflation may remain elevated in the near term, which may invite greater effort by the Fed to slow it down. 

This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this site were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions.