The FRED Blog has discussed the economic impact of war on labor markets and energy prices. Today, we discuss the impact on the price of lard. Stay with us, here…

Our FRED graph above shows data from the NBER’s Macrohistory Database on the retail and wholesale prices of lard in New York between 1911 and 1943. There were very large price swings during that time, so let’s break it down:

• Between 1911 and early 1916, lard prices were stable in the range of $0.10 – $0.15 per pound, even though World War I began in 1914 and the US didn’t enter the conflict until almost three years later.
• Between mid-1916 and mid-1919, retail lard prices (solid dark blue line) rose by 156% and wholesale prices (dashed light blue line) rose by 168%. Increased foreign demand for food items, whose production was disrupted during the Great War, helps explain those price hikes.
• After 1920, prices dropped below pre-war levels once foreign supply expanded, vegetable-based consumer alternatives to lard became available, and the Great Depression began.

World War II broke out in 1939 and the U.S. joined the conflict at the end of 1941. But the price of lard  and many other agricultural products didn’t rise nearly as much as they did two decades earlier. Changes  in consumption patterns and international finance conditions and the experience gained during World War I in managing agricultural prices all contributed to this more muted inflationary response.

At the risk of larding this post, it’s thought-provoking to discuss the ratio between the retail and wholesale prices during this time. The retail price is always higher than the wholesale price, to account for retailer overhead cost (e.g., distribution and marketing expenses) and profit margins. But the price margin between retail and wholesale prices was at its lowest between 1916 and 1919, when prices were rising the fastest. This may reflect some difficulty in passing on the full amount of the price increases to consumers.

Read more about farm product prices during the world wars in this related article by J.M. Tinley in the American Journal of Agricultural Economics. For a deeper dive into the history of lard and a gruesome reference to Upton Sinclair’s The Jungle, check this episode of the Planet Money podcast.

How this graph was created: Search FRED for and select “Retail Price of Lard for New York, NY.” From the “Edit Graph” panel, use the “Add Line” tab to search for and select “Wholesale Price of Lard for New York, NY.”

Suggested by Diego Mendez-Carbajo.