Wells Fargo Chief Agricultural Economist Michael Swanson joins Yahoo Finance Live to discuss the rise in food prices as the Super Bowl approaches.

Video Transcript

- We are going to move away from energy costs to higher food costs. Prices are on the rise with a latest CPI report showing an increase in December for five of the six major food group indices. Here to discuss the rising costs will persist into the new year is Michael Swanson, Wells Fargo Chief Agricultural Economist. Michael, thank you so much for being here. And I know you have some tips later on about how not to break the bank if you're hosting a Super Bowl party. But really, want to touch on some of these food inflation prices that we're seeing.

So the food at home index rose 6 and 1/2% in 2021, the biggest increase is, of course, coming in meat, poultry, fish, and eggs up by an average of 12 and 1/2%. Food away from home also up 6%. Are we seeing any relief in sight when it comes to food inflation?

MICHAEL SWANSON: I think we are. We're seeing an opportunity going forward here. What's going to happen is we're seeing some good supply response. Now, especially in the protein side, that's an interesting one. We're going to see a good supply response, but we're also going to see some of the margin come out of the packer side. So hopefully, that will translate into a slowdown and maybe even some savings for the consumer.

- Let's talk a little bit about those savings because when you look at the typical Super Bowl party menu, you got to have your chicken wings, you got to have your chips, and your dip, how are prices for those items looking as we move closer to the big game?

MICHAEL SWANSON: That's a real mixed model out there. The chicken wings are really kind of off the chart. I mean, depending on what you're going to buy, whether you're buying the pre-cooked or the individually quick frozen, we're seeing them from 1% to 22% higher than a year ago at this time. I'm looking at it like a four-week moving average that gets really messy week to week.

But it's interesting because like I say in the report, individually quick frozen, you can buy them at the store, they're still half the price of what you pay for precooked. So there are some opportunities save some money if you're willing to do the work.

- And things like chips and dips, I love the analogy you use because you say carbs and veggies are your best offense in keeping costs low.

MICHAEL SWANSON: Yes. And we've been lucky. The potato chip market, we had a good crop, even with some of the problems that we had. Vegetables, surprisingly, enough you know vegetables are not up a lot. Let's just say that 2% to 5% range, depending on what you buy, compared to the proteins, as you mentioned earlier, that 12% to 15% range. Definitely, if you can put a few more veggies on the platter, you're going to find an opportunity to stretch that dollar.

- I want to get to some of your tips, Michael, for keeping your costs low for that Super Bowl. I don't know how many people are going to have parties given this whole Omicron situation right now. But your Super Bowl gathering, perhaps, of a smaller size, you say go for the glock. It's interesting you say that because I've noticed I'm paying a whole lot more for a lot of different things at the supermarket, but avocados are not necessarily one of those things.

MICHAEL SWANSON: There we get to thank our friends in Mexico. Most of our avocados these days come from either Mexico or Peru. And there's been a large expansion. I mean, we've seen a lot of plantings, access to water, and labor is still relatively good there. So we've seen good supply. And that supply has translated into not much of a price increase. So there's an opportunity there.

- And then you also say pork is a good addition to the menu to help keep prices low.

MICHAEL SWANSON: Well, everything is relative. Let's put it this way, for example, beef, even hamburger is up 12%, 14%, steaks are up almost 20% Pork is up 7% to 9% depending on kind of cut you're looking at right now. And so it's a relative opportunity. I mean, so chicken and beef are really up quite strong, especially those wings and the chicken side. So pork, some pork chops or some pork shoulder, all those opportunities are good things.

- Now, let's get a little pulled pork. Why not, right? Let's get two of the beverages of the day. And I know beer is, of course, a very popular one for Super Bowl parties. What are beer prices look like relative to things like wine, I guess, or mixed drinks, cocktails?

MICHAEL SWANSON: It's interesting-- somebody else's pain sometimes is our gain. And what we're seeing in the beer market is a lot of supply and a fairly muted demand right now. Hard seltzers, even though we've seen some of the market come back on that, they're still taking quite a bit of market share. So the beer suppliers are in a tough spot. They have higher aluminum prices. They have higher hops and barley prices. But they haven't been able to pass along that price as much as some of the other elements. So 4% to 5% is what we're seeing in the CPI numbers.

Wine is kind of in a similar spot. Once again, it's a global market. If the Chileans, the Australians, and the Europeans have a good supply of wine, well, then even though the California producers are struggling with water and labor, they can't raise the prices as much. So once again 4% to 5%, so higher than last year, but not nearly a double digit that we're seeing in some other categories.

- All right. And farmers also complaining more broadly about surging prices for fertilizers. So hopefully, those come down a little bit as well. We will leave it there. Michael Swanson, Wells Fargo Chief Agriculture Economist, thank you so much for your time and those Super Bowl tips.