Food Prices on a Rollercoaster Ride
Recently released consumer price data revealed some interesting trends regarding food prices. As of November 2024, food prices increased by 2.9% year-on-year, but surprisingly, they fell below the overall inflation rate of 3.1%. This marks the first time since January 2022 that food prices have not outpaced overall inflation.
The relatively low food price inflation can be attributed to the food prices themselves, which only rose by 0.1% from October to November, with an annual inflation rate of 1.7%. Philip Powell, director of the Indiana Business Research Center and academic affiliate professor at Indiana University, credits this decrease to the easing of pressure on the food supply chain.
However, there is a silver lining for restaurants as they are seeing a surge in diners, with the restaurant price index increasing by 0.4% from October to November and 5.3% year-on-year. According to Powell, the restaurant prices remain high due to the necessity of paying higher wages to retain employees and the impact of a low unemployment rate of less than 4%.
Looking at the bigger picture, food price trends reveal some interesting developments in various food categories.
A Mixed Bag of Food Prices
The price of frozen juices and beverages, beef, baby food, and sugar has seen remarkable increases, placing a burden on businesses and consumers alike.
- Frozen Juices and Beverages (without carbonation): These products saw an increase of 18.6% from the previous year, thanks to hurricanes, especially Hurricane Ian, and destructive citrus diseases affecting supply.
- Beef and Veal: Beef and veal's prices have climbed by 8.7% year-on-year, with raw roast beef and raw beef steaks experiencing a 12.5% and 9.1% increase respectively in the 12 months leading up to November.
- Baby Food and Infant Formula: These essential items have experienced a 7.6% increase from the previous year.
- Sugar and Sugar Substitutes: The cost of sugar and sugar substitutes has risen by 6.8%.
Conversely, some categories have provided much-needed relief to consumers:
- Eggs: Egg prices, which had soared by 70.1% at the beginning of the year, have now dropped back by 22.3% as the supply increases due to routine avian disease outbreaks.
- Salads, Apples, and Fresh Fruits and Vegetables: Salad prices have fallen by 10.2%, while apple and fresh fruit and vegetable prices have dropped slightly by 0.2%.
Month-to-Month Food Price Changes
While some foods have become less expensive, other categories experienced price increases in November.
- Potatoes: The seasonally-adjusted data showed a 4.6% increase in potato prices compared to October.
- Butter: Butter prices climbed by 4.3% in November.
- Citrus Fruits: The price of citrus fruits has risen for the third consecutive month, increasing by 3.2% from October.
On the other hand, certain items saw a decrease in their prices:
- Salads: Salad prices went down by 2.9%.
- Frozen Vegetables and Fruits: Tofu, frozen fruits, and vegetables prices fell by 2.6%, 2.4%, and 2.3% respectively.
This data highlights the ongoing challenges faced by consumers and businesses in navigating the ever-changing food price landscape, with certain categories experiencing fluctuations and price increases.
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