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Here’s why food prices remain stubbornly high even as inflation cools


Story Produced by States Newsroom

Shoppers hoping for a little relief at the grocery store for their holiday meals will be disappointed by the Consumer Price Index released Tuesday. The CPI shows inflation cooling but food prices – particularly for some holiday staples – remain high.

The CPI increased 0.1 percent in November, which was lower than some economists expected. Over the last 12 months, it rose 7.1 percent. Food went up 0.5 percent last month after an increase of 0.6 percent in October. The food index climbed 10.6 percent over last year. 

“The headline inflation numbers are encouraging for the general economy but consumers are not being relieved at the grocery store,” said David Ortega, associate professor at the department of agricultural food and resource economics at Michigan State University. “We’re looking at November being the ninth consecutive month of double-digit grocery price inflation. Grocery prices are still 12 percent higher than they were a year ago.”

In August, the cost of food shot up 11.4 percent over last year, which is a level not seen since May 1979, according to Marketwatch’s analysis of government data.

“The good news is that food price increases and grocery price increases peaked in August,” Ortega added. “They’re just slowly starting to come down. We’re headed in the right direction but consumers are still not feeling relief at the store and that’s because inflation captures the rate of price increases over time, so just because the inflation rate starts to calm down a bit doesn’t mean that things are getting cheaper. They’re just not rising in price as quickly.”

Supply chain disruptions, the conflict in Ukraine, climate change, the deadliest bird flu in U.S. history, transportation costs, and increased consumer spending on food, are all drivers of higher food prices, Ortega explained. 

“We have supply chain disruptions and they’re starting to ease from the pandemic. But then we have the conflict in Ukraine that led to a surge in commodity prices earlier this year. Those have come down significantly, but it takes time for that to be fully realized at the grocery store.”

Climate change has also affected agricultural output, he said, which has meant less food out in the market and increased prices. Ortega said that although it’s hard to say when food prices will begin to come down, he expects that it could happen in the next six months or so. The International Monetary Fund released a report in October that said Federal Reserve interest rate increases will put “downward pressure on prices through the end of next year.”

Donna McCallister, assistant professor at the department of agricultural and applied economics at Texas Tech University, said prices always increase this time of year, compounding the problem for many Americans this month. According to Bankrate’s Nov. 23 analysis of the cost of holiday essentials, six of 10 of the most inflated prices were for food, including turkey, bakery items, eggs, flour, and prepared mixes.

Consumers preparing a Christmas ham, buying a frozen pie, or making sugar cookies for a party this month will find significantly higher prices than last year. Ham is up 7.8 percent year over year, frozen and refrigerated bakery products are up 19.4 percent, and eggs are up 49.1 percent, the CPI shows.

“A lot of that has to do with increased cost of production and transportation, but also increased demand for these things like butter, where people go out and buy things like eggs, butter, and flour for their cooking, so there’s also a demand story here as well,” Ortega said.

McCallister suggests cutting down on food waste by going to stores more frequently for specific meals, buying some items in bulk, or switching from name brand to store brand to save money this holiday season.

This story is republished with permission under New Hampshire Bulletin’s Creative Commons license.


About this Contributor

Casey Quinlan

Casey Quinlan is a national economy reporter for States Newsroom, based in Washington D.C. For the past decade, they have reported on national politics and state politics, LGBTQ rights, abortion access, labor issues, education, Supreme Court news and more for publications including The American Independent, ThinkProgress, New Republic, Rewire News, SCOTUSblog, In These Times and Vox.

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