Topline
While food inflation has started to slow down, some items—particularly sweet treats like cookies and ice cream—have increased in price as meat prices stagnate, a new report by the Wells Fargo Agri-Food Institute found ahead of the July 4 long weekend.
The cost of baked goods is on the rise, with chocolate chip cookies up 14% and bread up 22% year … [+]
Key Facts
The cost of baked goods is on the rise, with chocolate chip cookies up 14% and bread up 22% year over year, the report found.
Initially the rise in baked good prices was attributed to the strain on Eastern European wheat supply due to the Russian invasion of Ukraine, but the increase is now linked to rising flour costs due to extreme drought conditions in middle America, according to Wells Fargo.
Increased prices of the components of ice cream like sugar, and an increase in the price of manufacturing ice cream, has led ice cream prices to increase 9% since last year, said Michael Swanson, Wells Fargo’s chief agricultural economist and author of the report.
Potato chips are another item that’s seen an increase in price, up 15% from last year, a residual effect of last year’s drought in Idaho and the Dakotas, where potatoes are largely grown, the report found.
Beer prices are up 8% from this time last year, and wine prices have gone mostly unchanged from last year, when they had already started to decrease—the Bureau of Labor Statistics estimates a liter of wine costs about $13.40.
Non-alcoholic soft-drinks, however, have seen an increase: The average 12-ounce soft drink is up 14% from a year ago, which is largely caused by the increased transportation and labor costs of moving heavier items like bottled or canned beverages, Swanson said.
Contra
Most meats have increased only slightly in price since this time last year, with sirloin steak up 2.9% from last year, and ground beef up less than 1% from last year.
Tangent
Egg salads and deviled eggs may reappear at this year’s July 4 celebrations because of a decrease in egg prices. For months, conversation about the rise in eggs prices dominated the grocery store chatter, but Wells Fargo’s report found high egg prices have started to subside. Currently, a dozen eggs costs $2.67, about 7% less than it did this time last year. And a report from the Bureau of Labor Statistics found that the price for a dozen eggs plummeted nearly 14% in May—its biggest monthly decrease in more than 70 years.
Key Background
Inflation has finally started to ease in recent weeks, hitting a multiyear low last month and marking the lowest inflation rate since March 2021. According to the Labor Department, consumer prices rose 4% year-over-year last month. The numbers show Americans are getting a break from surging prices amid the most persistent stretch of inflation in almost four decades, including surging prices for meat and other food, though inflation still remains above the 2% goal set by the Federal Reserve, which has sought to ease price increases by hiking interest rates. Besides the Russian invasion of Ukraine’s impact, industries are still recovering from the effects of pandemic-era supply chain issues.
Further Reading
Egg Prices Finally Plummet Nearly 14%—But Meat, Frozen Fruit Climb—Here’s How U.S. Grocery Bills Changed In May (Forbes)
Source: https://www.forbes.com/sites/anafaguy/2023/06/22/cookie-and-ice-cream-prices-surge-ahead-of-july-4-as-meatflation-subsides-heres-why/