Baby formula shortage spurs rationing and more inflation

One of the most important products for new parents is in short supply. Baby formula, which three-quarters of babies in the U.S. receive within their first six months, is increasingly out of stock at retailers across the country. Prices also have spiked, with the average cost of the most popular baby formula products up as much as 18% over the last 12 months.

The supply of formula is so constrained that retailers like Walgreens are even limiting how much consumers can purchase at one time. A spokesperson for the drugstore chain told CBS MoneyWatch it is limiting customers to three infant and toddler formula products per transaction, citing “increased demand and various supplier issues.”

Supply-chain snarls related to COVID-19 are contributing to the shortage of formula around the U.S. They include manufacturers having more difficulty procuring key ingredients, packaging hangups and labor shortages, with those factors combining to affect production and distribution. In addition, a major baby formula recall in January exacerbated shortages.

At retailers across the U.S., 29% of the top-selling baby formula products were out of stock as of the week of March 13, according to an analysis by Datasembly, which tracked baby formula stock at more than 11,000 stores. That’s up sharply from 11% in November.

“This is a shocking number that you don’t see for other categories,” Ben Reich, CEO of Datasembly told CBS MoneyWatch.

“We’ve been tracking it over time and it’s going up dramatically. We see this category is being affected by economic conditions more dramatically than others,” Reich added. 

In 24 U.S. states, 30% of formula was out of stock as of mid-March, while other states were seeing even more severe shortages. In Minnesota, 54% of baby formula products were out of stock that same time. Parents in Connecticut, Hawaii, Iowa, Louisiana, Maryland, North and South Dakota, Rhode Island and Texas are also grappling with severe shortages of at least 40%, according to Datasembly. 

By comparison, over the first seven months of 2021, between 2% and 8% of baby formula products were out of stock. 

“We’ve noticed it being difficult to find maybe a couple months ago — two, three months ago — and then just recently we can’t find it,” San Francisco resident Irene Anhoeck told CBS News earlier this year. “We’ve tried all the local Targets. We checked Costco, Costco online, Walgreens, Long’s. Can’t find it anywhere.”

Product shortages were further exacerbated in February, when Abbott Nutrition issued a widespread recall of its powdered baby formula products, following reports of illness among infants who had consumed the baby products. The U.S. Food and Drug Administration last week issued a warning telling consumers not to use any of the recalled products manufactured at Abbott Nutrition’s Sturgis, Michigan, facility, after it found the plant to be unsanitary. 

Avoid hoarding

The Infant Nutrition Council of America recently assured parents in a statement on its website that manufacturers are increasing production to meet families’ needs. The council also encourages parents to keep a 10-day to two-week supply or formula at home, while urging them not to stockpile products. 

A spokesperson for CVS Health acknowledged that “product supply challenges are currently impacting most of the retail industry.” The company is working with “national brand baby formula vendors to address this issue and we regret any inconvenience that our customers may be experiencing,” the spokesperson added. 

In January, Enfamil, a leading baby formula brand, said it was coping with an unprecedented 18% surge in demand for baby formula nationwide. 

“We have taken steps to ramp up production and are currently shipping 50% more product, to address issues as fast as possible,” a spokesperson for Reckitt, maker of Enfamil, told CBS News in a statement at the time.