Beef prices hit record highs as nationwide cattle inventory drops to lowest level in 70 years

Beef prices are at a record high in the wake of a drought that left cattle inventory at the lowest level in 70 years amid strong demand, resulting in price increases for steak and ground beef.

The Bureau of Labor Statistics' consumer price index report for August showed a surge in beef prices over the past year. Ground beef prices were up 12.8% on a year-over-year basis in August, while beef roasts were up 13.6%, and steak prices were 16.6% higher. Those inflation figures are well above the 3.2% year-over-year rise in all food categories, as well as the 5.4% rise in meat prices from last year.

Cattle rancher Mike Martz of Larson Farms in Maple Park, Illinois, told FOX Business' Kelly Saberi that cattle inventories have declined in recent years due to drought affecting important ranching areas.

"The real issue here is the drought that happened a number of years ago, and Texas, Oklahoma, Kansas, the Southeast lost all their grass, all their forage. And when that happens, you've got to liquidate cows, and that's what we've done," Martz said. "We've got the lowest cow inventory since 1951, so that's the cause of this."

Overhead costs for cattle ranchers have also climbed, with feed, labor, fuel and equipment expenses trending higher.