Rising prices are on the menu for Thanksgiving, with inflation at 7.7% With Thanksgiving just two weeks away, food and family are on many people's minds. But turkey and travel will carry a hefty price tag this year. The annual inflation rate in October was 7.7%.

Rising prices are on the menu for Thanksgiving, with inflation currently at 7.7%

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STEVE INSKEEP, HOST:

Democrats endured this week's election, largely, despite being weighed down by continued inflation. And we have some news about inflation today. The annual rate appears to be falling a bit. The Labor Department issued its report for the month of October, and NPR's Scott Horsley is covering that. Scott, good morning.

SCOTT HORSLEY, BYLINE: Good morning, Steve.

INSKEEP: What are the numbers?

HORSLEY: The annual inflation rate in October was 7.7%. That's down a bit from the 8.2% annual rate in September. And the monthly price increase between September and October was smaller than forecasters had expected. That has investors cheering this morning. Stocks rose sharply at the opening bell. Shoppers at the grocery store are still seeing very high prices, though, two weeks out from one of the big eating days of the year.

INSKEEP: Yeah.

HORSLEY: Grocery bills are up 12.4% from this time last year. The report on inflation doesn't break out the cost of turkey in particular, but we know wholesale turkey prices this fall were up about 23%. That could gobble up a lot of the typical Thanksgiving budget...

INSKEEP: Gobble.

HORSLEY: ...Although...

INSKEEP: He's here all week, ladies and gentlemen - Scott Horsley. Oh, no. Please proceed. Go on. Go on. Please.

HORSLEY: Economist Michael Swanson at Wells Fargo says, you know, grocery stores may eat some of that wholesale increase as long as shoppers splurge on the rest of the meal.

MICHAEL SWANSON: It'll be interesting to see what the retailers do. There might be some promotional activity around that to try to get you in the store to buy the rest of the expensive basket.

HORSLEY: One reason for those high turkey prices, of course, is the avian flu that whipped through poultry stocks this year. But Swanson says energy costs, labor shortages and adverse weather have also raised the price on some other Thanksgiving staples like cranberries and potatoes.

SWANSON: The prices that potato processers were paying for potatoes on the spot market was three times higher than they typically pay.

HORSLEY: That's because of hot, dry weather in the Pacific Northwest, where a lot of potatoes are grown. Now, sweet potatoes, on the other hand, are mostly grown in the Southeast, especially in North Carolina. And they're a relative bargain this year. I saw a big pile of sweet potatoes on sale at my local supermarket this past weekend.

INSKEEP: Good to get that shopping update. Are people going to eat differently this Thanksgiving because of prices?

HORSLEY: We might see some substitutions. Some folks might decide this is the year to try the store-brand stuffing mix instead of the national brand. But Swanson thinks most people are not going to scrimp that much on the big Thanksgiving meal. Maybe they'll cut corners elsewhere. And we're seeing something similar in travel. Airfares dipped a little bit between September and October, but the price of plane tickets is still up almost 43% from a year ago.

INSKEEP: Wow.

HORSLEY: Nevertheless, Hayley Berg, who's with the travel app Hopper, says people are still flying.

HAYLEY BERG: For many families, they may not have been able to travel home or to see family for the holidays in two or three years. Keep in mind that in November and December of last year, we had the delta and omicron waves of COVID, which caused mass cancellations and many travelers to change their plans at the last minute.

HORSLEY: One piece of good news for travelers - rental car prices are down a little bit this year compared to last fall, when rental car companies were still struggling to rebuild their fleets.

INSKEEP: You're just reminding me - I traveled home to Indiana not long ago and had trouble even finding a rental car. Clearly, people are still traveling despite the prices, which makes me wonder what happens when the bill comes due.

HORSLEY: Yeah, some people are digging into their savings to cover expenses. Others are relying on credit cards. Credit card balances jumped about 13% in July, August and September. And keep in mind, interest rates on those credit cards have been climbing in lockstep with the Federal Reserve's rate hikes as the central bank tries to tamp down demand and bring inflation under control. Ted Rossman, who's at Bankrate, says the average interest rate on credit cards is now a record high, topping 19%.

TEDD ROSSMAN: I think there's going to be a lot of post-holiday debt, hangovers, a lot of sticker shock in January, unfortunately.

HORSLEY: So far, though, defaults and delinquencies are still low by historical standards.

INSKEEP: NPR's Scott Horsley, always a pleasure hearing from you. Thank you so much.

HORSLEY: You're welcome.

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