The nation’s rate of inflation is yet to fall to the Federal Reserve Board’s goal of 2%, but it just got closer. McDonald’s contends that beef processors teamed up to make the company pay higher prices than it should. And a Georgia agricultural manufacturing company is eliminating more jobs, at least temporarily.
Rate Watch
Inflation has gone down a lot, especially over the past two years. But it may not have dropped enough recently to convince the Fed that it deserves another bigger borrowing rate reduction next month. More than likely this will be a 25-basis point cut.
The Consumer Price Index report released Thursday found that prices rose 2.4% over the past 12 months. This is the smallest increase in three years. Wages have outpaced inflation for nearly 18 months now.
Medical care, clothing, auto insurance, and airline fares pushed upward pressure on inflation. Relief came elsewhere. Agricultural producers have welcomed one of those: a further drop in fuel costs. Gas prices fell 4.1% from August to September.
Price-Fixing Claims
Inflation is on the mind of McDonald’s, too. But it might not be the way you assumed. The company claimed that Cargill, JBS SA, National Beef Packing Co., Tyson Foods Inc., and their affiliates conspired to set the prices on beef. McDonald’s in its lawsuit claims that this has been happening for a decade.
Those big four beef processors control most of the market, and McDonald’s alleges that they used that market control to reduce beef supply, which raised prices higher than what they would have been in a competitive market.
RELATED: Food Business News has this story about the lawsuit.
Beef is a big business in the United States. “With the largest fed-cattle industry in the world, the United States is also the world's largest producer of beef, primarily high-quality, grain-fed beef for domestic and export use. Nevertheless, the United States is a net beef importer, purchasing lower-value, grass-fed beef destined for processing,” stated a USDA report.
The price of beef is among the higher costs for McDonald’s. Prices have doubled over the past decade for some of its most well-known items, according to an analysis by Visual Capitalist.
The publication looked at 10 core menu items from different American fast-food chains. It found that McDonald’s had the largest price increase.
RELATED: Visual Capitalist charted inflation across U.S. fast food chains from 2014-204, including McDonald’s, Popeyes, Chipotle, and Burger King. See the breakdown of how much each chain raised prices here.
More Cuts
AGCO -- a Duluth, Georgia-based agricultural manufacturing company -- confirmed on Thursday another round of layoffs at its Kansas facility. The announcement follows a series of changes in 2024.
AGCO produces ag equipment like tractors, combines, sprayers, and foragers.
In June, the company said that it was making two moves: cutting jobs at its plant in Hesston, Kansas, and transferring some of its production line to Mexico.
At the time the company said that shifting production of small balers to Mexico in 2025 would not necessitate job cuts in Kansas. A spokesperson said that the June job cuts were in response to weakened demand in the agriculture industry.
RELATED: KWCH-TV in Wichita, Kansas, has this story about the changes at the Hesston facility.
In February, AGCO said that it would reduce production by 10% and focus on precision agriculture.
AGCO said that the latest workforce reduction will “impact less than 70 people” as it confirmed in a statement to KSN-TV in Wichita, Kansas.
