once more, food costs are upward trending. Uncovering the reasons for this hike.
once more, food costs are upward trending. Uncovering the reasons for this hike.
About an hour and a half north in Richfield, you could obtain eggs, but they don't come cheap. That dozen costs $1.70 more, marking a significant 40% rise compared to just four months ago.
Egg prices surged by 8.2% nationwide in November, recording one of the highest monthly increases in the past two decades, as per Consumer Price Index data released recently. This rise isn't isolated to eggs; shoppers have also witnessed price hikes in beef, coffee, and non-alcoholic beverages, causing overall grocery prices to experience their largest monthly increase since January 2023.
Last month, wholesale prices for chicken eggs skyrocketed by nearly 55%, while wholesale food prices climbed by 3.1% - their highest monthly increase in two years.
Despite these rises, economists advise against worrying excessively. The abrupt price increases in major food categories signify isolated incidents rather than a forewarning of a substantial inflation surge.
However, Americans have had to grapple with prices climbing at a faster-than-usual pace for quite some time now.
Although seemingly anomalous, these price increases pile on additional costs to products that have become considerably more expensive since before the pandemic.
According to Gregory Daco, EY Parthenon's chief economist, "Overall grocery price inflation is relatively moderate; it's essentially at the same level as before the pandemic ... there's nothing alarming." However, he added, "Prices as compared to their pre-pandemic levels remain significantly high."
The intensity of recent high inflation - primarily due to the pandemic, the war in Ukraine, and other unforeseen events - brought tremendous challenges to Americans and perhaps contributed to former President Donald Trump's re-election.
Dramatic escalations in 'certain food sections'
Before inflation became a common household phrase, food prices have historically been volatile due to various factors like weather events, crop failures, diseases, conflicts, or temporary interruptions.
This volatility is reflected in the current situation with eggs (as well as beef, coffee, and orange juice).
As Billy Roberts, senior analyst for food and beverage at CoBank, a bank that caters to agriculture businesses, pointed out, "Inflation is what it is, but we're observing more pronounced escalations in specific food sections, not overall increases."
Eggs (+37.5% yearly): An avian flu epidemic is ravaging poultry farms across the country, reducing the supply at a time when Americans are celebrating, baking, cooking, and dining out more.
The USDA revised down its US egg supply estimates and elevated its price forecasts for 2025 in December.
Beef (+5% yearly): US cattle inventory is at its lowest level in over 70 years, according to the American Farm Bureau Federation. The contraction is projected to continue through 2025 due to droughts and surging costs.
US beef cow herd expansion is not predicted to commence until 2026 or 2027, as per a recent CoBank report.
Orange juice (frozen juices +17.2% annually; fresh juices 3.1% annually): Frozen non-carbonated juices have been hit the hardest by a beverage category that has been battered by hurricanes, bad weather, and citrus diseases. The situation may further deteriorate for orange juice as Brazil - which accounts for around 30% of America's imported OJ - suffered its worst harvest in decades due to flooding, drought, and citrus greening disease.
"I think these price increases [in orange juice] might not be temporary," CoBank's Roberts suggested. "I expect there to be some supply issues underlying those price increases."
Coffee (+1.9% annually): The same weather events that have affected Brazil's citrus production negatively have impacted the second-most consumed beverage in the US. Arabica coffee beans, which constitute the majority of global coffee bean production, sold for a record high of $3.44 per pound last week.
The forthcoming climate seems bleak for coffee lovers, as Michael Hoffmann, a professor emeritus at Cornell University's College of Agriculture and Life Sciences, stated earlier this year, "Probably, coffee's just going to get more expensive."
Chocolate (wholesale chocolate manufacturing from cacao +108.7% annually): The past three years have seen a series of adverse weather events striking cocoa-producing areas, primarily in West Africa, which is responsible for over 70% of global cocoa supply. In response, candy manufacturers have scaled down their product sizes, adjusted recipes, and increased their reliance on non-chocolate offerings.
As Bank of America economists wrote in a recent note, "Cocoa costs, which might remain elevated into 2026, are putting the confections industry under pressure on multiple fronts."
Over the past month, grocery prices have escalated by 1.6% compared to the previous year, as per the most recent Consumer Price Index report. Despite this increment, the inflation rate remains below the overall inflation rate (up to 2.7% last month) and matches the average seen during 2008-2019, as per statistics from the Bureau of Labor Statistics.
Although the grocery price inflation has surpassed this period last year, it's nowhere near the heights of 2022 when it averaged 11.4% and peaked at 13.5%, surpassing the overall inflation's highest point of 9.1%.
The unrelenting momentum during that period resulted in grocery prices soaring by 27% compared to February 2020, prior to the pandemic in the US. Certain food categories were significantly impacted, with eggs increasing by 81%, margarine by 55%, beef and veal by 37%, and juices by 32%.
"It's unlikely that food prices will see a significant decrease and return to 2019 levels," claimed Daco. "The best one can hope for, in general, is a stabilization in prices."
Last week, Trump suggested that lowering grocery prices could be achieved by increasing domestic oil drilling, which should subsequently reduce gas prices and transportation costs.
Economists and food industry experts, however, disagree. Expanding manufacturing facilities nationwide has lessened the miles, and a significant portion of the transportation cost increase is due to driver shortages.
Amidst these escalating costs, economists and businesses have expressed concern regarding Trump's pledges, such as 25% tariffs against Mexico and Canada as well as mass deportations, which could potentially increase food prices and aggravate overall inflation.
Spending $75 on a case of eggs: "I just kind of absorb it"
It's quite challenging to sidestep rising food prices, forcing both consumers and businesses to adjust.
"It seems like consumers will continue to try and stretch their food budget in any way they can, not only because of the food price increase, but also because the price of everything else seems to be going up," indicated Roberts.
Vidlak's Brookside Cafe in Omaha, Nebraska, has been providing breakfast and lunch for 28 years but is currently grappling with the escalating costs of essential ingredients. With a caring approach toward his customers, Vidlak tries to minimize the price impact.
"Recently, the cost of eggs has skyrocketed," shares Vidlak amidst the cafe's Friday fervor. "Earlier, a case of them cost between $18 and $20. At present, a 15-dozen case has escalated to $75."
However, he has managed to discover alternatives. Utilizing weekly price checks, he bulk-bought cage-free eggs, less affected by the avian flu and significantly cheaper than conventional eggs, while also including liquid egg mixes.
"I've managed not to raise my prices for, roughly, half a year now," he added. "I simply take it on myself."
Although his business takes a toll every time prices go up, Vidlak is reluctant to transfer these costs to his customers, who have been loyal support for years.
"I'm an owner-operated restaurant, so I just absorb it," he said. "My clientele is extensive and frequent, some of them visiting daily."
He further stated, "You want to generate income, certainly, but not all in one go."
The recent surge in egg prices is not an isolated incident; shoppers have also noticed price hikes in beef, coffee, and non-alcoholic beverages, leading to a significant increase in overall grocery costs.
Egg prices have experienced a significant 40% rise in just four months, with a dozen eggs now costing $1.70 more than before. This increase is due in part to an avian flu epidemic that has reduced poultry farm supplies and increased demand during celebrations and dining out.