(Bloomberg) -- American households are about to eat their costliest Thanksgiving dinner ever. That is, if they can find the turkey.
As families tentatively plan to gather again after last season in lockdown, shoppers should expect to pay more for meat and all the trimmings. Whole frozen turkey prices are up about 20% year on year to an all-time high, according to the U.S. Department of Agriculture, while retail prices for pie-staples like milk and sugar are at multi-year highs. Even alcohol costs, from beer to cocktails, are climbing as the kickoff to the U.S. holiday season approaches.
“Nothing on that Thanksgiving table is really going to be spared,” said Curt Covington, senior director of institution credit at AgAmerica Lending, which loans money to farmers. He says families should brace for the meal to be as much as 15% higher than last year, with supermarkets possibly selling out of smaller turkeys and turkey breasts. “You’re already seeing that there’s not going to be the type of bargains that there were in the past.”
America’s Thanksgiving holiday, always the fourth Thursday in November, lands at a time when runaway inflation, mangled supply chains and heightened demand are converging. Food inflation, an issue the world over, has been worsening in the U.S. as a shortage of workers at meatpacking plants and transportation companies leaves grocery shelves looking sparse. At the same time, costs for farmers including fertilizer, animal feed and fuel are soaring. Taken together, food prices continue to climb, helping to fuel in October the fastest annual growth in U.S. consumer prices since 1990.
Meanwhile, more people will be traveling this year after widespread vaccination efforts in the spring across America, increasing demand for the traditional foods from poultry to potatoes that normally grace Thanksgiving tables. Throw in gasoline prices, around the highest since 2014, and households are going to feel Thanksgiving’s pinch. Some families, looking to stay within budget, are buying smaller birds, planning fewer side dishes, and doing the unthinkable for this time of year: trying to avoid leftovers.
“It’s going to cost you more to host Thanksgiving and cost your family more to drive there this year,” said Daniel Roccato, a financial analyst at Credible, an online marketplace for loans. A family of four can expect to spend at least $26.57 to put the classic Thanksgiving dinner on the table, up about 10% from 2020, not counting the extra $18 a week drivers are spending at the pump, he calculates. “Without a doubt, due to the highest inflation in 30 years, the tab for this Thanksgiving dinner will be the highest consumers have seen.”
With prices rising ahead of the iconic American holiday, some are politicizing the issue. “This will be the most expensive Thanksgiving in the history of the holiday,” Representative Elise Stefanik, a Republican from New York, wrote in a tweet Wednesday. “The American people don't deserve Biden’s #ThanksgivingTax!”
One key factor behind the higher prices is the Thanksgiving centerpiece: the turkey. According to USDA data, wholesale frozen turkeys weighing 16 pounds or less cost on average $1.41 a pound currently, up 23% year on year. Bigger birds are up about 20% from last year to $1.39 a pound on average.
To be sure, some grocers will actually sell turkeys for less than they paid to attract customers. “That’s something they’re intentionally taking a loss on,” said Grace Grossen, an agricultural economist at the USDA. “They’ll make them really cheap to get people in the door to buy their canned goods and other items.”
The rising prices are partially because there’s less turkey in cold storage than normal for this time of year, with turkey breast meat in especially low quantities. A lack of labor has made it harder to de-bone, pack and ship poultry at the same time some families are opting for smaller birds or cuts. Nearly two-thirds of American adults said they would spend Thanksgiving with just their immediate family, according to a Morning Consult survey conducted in October, meaning they don’t need the 20-pounders common for this time of year. Smaller birds, those in the 10- to 12-pound range, will be in hottest demand, said Bloomberg Intelligence analyst Jennifer Bartashus.
One of those shoppers opting not to buy a whole turkey is Ellen Sheehy, who’s celebrating with just two other people. The 66-year-old will gather with only her sister-in-law and nephew this year because of Covid-19 precautions. She swapped a full bird for turkey breast in 2020 for the first time, and she’ll do it again this year, she said while shopping for groceries at Target (NYSE:TGT) in Manhattan’s Upper East Side neighborhood.
Worried about shortages, many Americans are shopping earlier than normal, stockpiling canned cranberry sauce and stashing birds in the freezer for weeks on end. According to data provider IRI, sales of Thanksgiving items in the three-week period ending Oct. 31 were up 63%, compared to a historical gain of 45% in prior years. The pickup was mostly driven by turkeys, pie filling, stuffing and stock. Middle- and high-income shoppers are more likely to buy early, with low-income shoppers usually waiting until closer to Thanksgiving to purchase ingredients.
Thanksgiving used to be one of the less-expensive holidays for the average American family that’s on a budget, said AgAmerica’s Covington. “That’s no longer the case,” he said, noting that the problems along the food supply lines are unlikely to abate soon. “This is going to drag through until Christmas, and possibly until the spring holidays like Easter. The supply chain is not going to get fixed anytime soon.”
In Fredericksburg, Texas, regenerative farm Roam Ranch is facing rising feed, grain and labor costs for its pasture-raised turkeys. The farm is also having trouble securing enough frozen and refrigerated trucks for shipping as skyrocketing fuel prices and a driver shortage plague the industry.
“Turkey prices for the upcoming Thanksgiving will be significantly higher than previous years,” said Roam’s co-founder Taylor Collins, noting that the ranch is seeing “disturbances in supply chains.”
Not everyone can stomach the higher prices. At the West Alabama Food Bank near Tuscaloosa, families won’t be getting turkeys this year because of the rising cost of food, said Jean Rykaczewski, executive director. The food bank serves about 63,000 people across nine counties in Alabama, funded by donations, some government funding and grants.
“I’m not bringing in turkeys this year. If people want turkeys, they’re going to get whole chickens,” she said. That’s “because one, we can’t afford it. And two, we don’t have anywhere to store it because we’ve filled up everything we have anticipating not being able to get it.”
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