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Labor and packaging contribute to rising food prices, Sriracha hot sauce experiencing shortage

Yahoo Finance food reporter Brooke DiPalma looks at the factors contributing to inflationary prices for groceries, produce, and meat, as well as the unprecedented shortage the leading Sriracha hot sauce producer is experiencing.

Video transcript

RACHELLE AKUFFO: Welcome back, everyone. The latest CPI report did nothing to ease pressure on consumer wallets, with food prices continuing their dramatic rise in May. Well, to break down the sticker shock is Yahoo Finance's very own Brooke DiPalma. And it really is a sticker shock when you finally put everything in the basket.

BROOKE DIPALMA: It absolutely is, Rachelle. Americans can simply go to the grocery store just to see the direct impact of inflation on American consumers across the board. Now, the cost of food rose 10.1% in the month of May, with that food at home, that grocery category, up a whopping 11.9%. That is the largest 12-month increase Americans have seen since April of 1979.

Now, when you take a look at the categories that are really driving that increase, meats, poultry, fish, and eggs, and eggs in particular really driving this increase overall, up a whopping 14.2%. But as you see right here, cereals and bakery goods, dairy, fruits and vegetables, non-alcoholic beverages, and beverage materials also driving that increase.

Now, I want to take a look at that other food and home category in particular. That includes fats and oils. That's up, in particular margarine, up 25%. But when you take a look at the items that the bureau tracks, when you take a look at eggs, fresh and frozen chicken parts, bacon, citrus fruits, milk, and coffee, those are all up, with particular eggs up a whopping 32.2%.

Now, back in April, we saw the price of eggs also increase, but that was largely due to the bird flu. Now, when I spoke to an economist this morning, he could not say whether or not that bird flu still saw a direct impact on the price of eggs. But he really alluded this to a multitude of factors.

It has to do with the cost of labor, transportation, packaging, and energy, which you saw up a whopping 34.6% in the month of May, driving costs higher. Now, of course, that June FOMC meeting happening next week. And one economist told me that the Fed has a very difficult job on their hands as Americans are really noticing this impact on their wallets.

DAVE BRIGGS: You got that right. And, Brooke, it's going to be hot outside this summer, but a little less spicy, I'm told-- do not take away my sriracha. I put this stuff on soup, on eggs, on chicken. You name it. I understand that shortages at hand.

BROOKE DIPALMA: Dave, you might want to lock that sriracha up, because there is, in fact, a shortage. One of the largest producers of Asian hot sauce in the market, that's Huy Fong, they told Yahoo Finance that they're seeing an unprecedented shortage of its products, like chili garlic and sriracha sauce.

And in a statement, Huy Fong management said, quote, "we are still endeavoring to resolve this issue that has been caused by several spiraling events, including unexpected crop failure from the spring chili harvest. We hope for a fruitful fall season." Now, management also thanks its customers, like you, Dave, for your patience and support.

But one of the big question here is, what exactly will customers face when they see that lack on the shelves? But in addition to that, when you think of these local restaurants who, like you, use it for so many different items on their menu, it'll certainly be interesting to see how exactly this impacts these local restaurants as we face this limited supply into the fall and, perhaps, even longer.

SEANA SMITH: Yeah, supply chain issues contributing to some of the higher prices that we're seeing at the grocery store. Brooke DiPalma, thanks so much for joining us.