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There are three factors that could lead to inflation which include demand-pull inflation, cost-push inflation and built-in inflation.
The raging inflation Americans have felt through the first half of the year already has consumers bracing for pricier meals this holiday season. But analysts are warning that the bird flu outbreak in the U.S. could mean an added dose of sticker shock when people buy their Thanksgiving turkeys.
Walter Kunisch, senior commodities strategist at Hilltop Securities Commodities, told FOX Business the American consumer should be prepared.
A platter of carved Thanksgiving turkey. (Ben McCanna/Portland Press Herald via Getty Images / Getty Images)
"Looking ahead to the Thanksgiving holiday, we believe that the impacts from the latest outbreak of highly pathogenic avian influenza (HPAI) in the U.S., combined with skyrocketing production costs, have led to a declining domestic turkey flock, lower meat supplies and higher prices," Kunisch said.
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The analyst points to sharply higher regional corn, soybean meal and diesel prices that have forced commercial production costs to surge and says the increasing cost of grains is contributing to the 5% decline in reported live weighs from 2021 and to lower domestic supplies.
Turkeys inside a barn at Out Post Farm in Holliston, Mass., Nov. 11, 2021. (Jessica Rinaldi/The Boston Globe via Getty Images / Getty Images)
For perspective, Hilltop estimates that commercial turkey production costs in Minnesota, the largest turkey-producing state, have risen 18% from 2021, and it expects those costs to be passed on to the consumer.
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Kunisch says the number of turkeys lost to HPAI is difficult to gauge, and the estimates have varied, but he points to the U.S. Department of Agriculture’s estimate of a 2.5% year-on-year decline in the domestic flock from 2021 as "highly credible."
A rack of turkeys (Ricky Carioti/The Washington Post / Getty Images)
"Year-to-date, 2022 turkey production is the lowest in 10 years and is running 5% below 2012 levels," Kunisch said. "The USDA’s most recent data show an alarming low level of turkeys in cold storage. With 2022 turkey production estimated at -4.3% from 2021, 2022 whole 8- to 16-pound wholesale hen prices are estimated to be 23% higher than 2021.
"With the spike in turkey prices, we believe that a decline in consumption during the holidays can occur."
LINK: Get updates and more on this story at foxbusiness.com.