Review and insights
As we have written before, there are several factors that can play a role in how food prices behave – among them are:
Transportation prices have moderated over the past few months – more over-the-road drivers are available, and the reduced price of diesel is helping to lower trucking costs.
Weather has and is playing a role on prices of beef – last year’s drought in our Cattle “Belt” caused cattle producers to bring more cattle to market last year, creating a shortfall for this year and 2024 – it takes about two years for a calf to grow enough to be ready for slaughter.
Fresh Produce growers are currently dealing with flooding in California – just as the growing area were transitioning from Arizona and Southern California to the Salinas Valley. The growers will transition to alternate growing areas, but it is too early to give a concrete projection for cost or product availability, The produce experts are projecting supply disruptions/higher prices, on some items over the next 2 months.
Highly Pathogenic Avian Influenza (HPAI) – mostly commonly known as Avian Flu killed 58 million birds in our country last year. Most of the birds were Chicken Egg Layers and Turkeys. No doubt, you saw the effect of HPAI in the price of eggs and the scarcity of some turkey products.
The world-wide supply chain has not full recovered from the effects of COVID-19 as we still see highly elevated prices for some non-food items and the scare availability of some food products produced here and abroad. On the positive side, we are back to “normal” with ocean-going ships having non-delayed access to our West Coast ports.
- Geopolitical
- Energy/Transportation
- Weather and Crop Harvest
- Other Factors
Transportation prices have moderated over the past few months – more over-the-road drivers are available, and the reduced price of diesel is helping to lower trucking costs.
Weather has and is playing a role on prices of beef – last year’s drought in our Cattle “Belt” caused cattle producers to bring more cattle to market last year, creating a shortfall for this year and 2024 – it takes about two years for a calf to grow enough to be ready for slaughter.
Fresh Produce growers are currently dealing with flooding in California – just as the growing area were transitioning from Arizona and Southern California to the Salinas Valley. The growers will transition to alternate growing areas, but it is too early to give a concrete projection for cost or product availability, The produce experts are projecting supply disruptions/higher prices, on some items over the next 2 months.
Highly Pathogenic Avian Influenza (HPAI) – mostly commonly known as Avian Flu killed 58 million birds in our country last year. Most of the birds were Chicken Egg Layers and Turkeys. No doubt, you saw the effect of HPAI in the price of eggs and the scarcity of some turkey products.
The world-wide supply chain has not full recovered from the effects of COVID-19 as we still see highly elevated prices for some non-food items and the scare availability of some food products produced here and abroad. On the positive side, we are back to “normal” with ocean-going ships having non-delayed access to our West Coast ports.
The chart below helps put recent inflation rates into perspective, the first shows food inflation each year from 2013 thru 2022 and thru February of this year. Note that prior to COVID the highest inflation was from in 2014 at 3.3%.
*For unfinished years, the latest inflation data (12-month based) is always displayed in the chart’s final column.
This chart shows the hyper-inflation inflation that we experienced over the past 12 months.
Let’s look at some projections on prices for the remainder of 2023. Of course, these projections do not consider any new or escalated military conflicts, another human health pandemic, an outbreak in animal disease or catastrophic weather event.
Following is the “Changes in Consumer Price Indexes, 2020 through 2023” published by the U.S. Government Bureau of Labor Statistics. The far right three columns give us their lower, mid and upper projections for inflation for key product categories for 2023. It is important to keep in mind that the right-hand columns show the BLS’ full-year projected inflation. - in some categories like eggs, we have already experienced a great deal of the inflation projected for 2023.
Following is the “Changes in Consumer Price Indexes, 2020 through 2023” published by the U.S. Government Bureau of Labor Statistics. The far right three columns give us their lower, mid and upper projections for inflation for key product categories for 2023. It is important to keep in mind that the right-hand columns show the BLS’ full-year projected inflation. - in some categories like eggs, we have already experienced a great deal of the inflation projected for 2023.
We recommend that you use the MID column as a guidepost for 2023 with the following exceptions: Boxed Beef prices should increase by 7% to 9%, Shell Eggs (assuming no additional widespread HPAI infections), should moderate to 10% inflation or less for the second-half of the year, Block Cheese should decline by 10%, Butter will decline by 15% or more in 2023 and Soy Oil will be fairly stable near current prices.
Overall, we have seen inflation go from last year’s double-digit results to 8% to 9% for Q1. We expect overall foodservice inflation to continue to moderate as we go through the year and for calendar Q4 to come closer to a more normal rate of 3%.
Overall, we have seen inflation go from last year’s double-digit results to 8% to 9% for Q1. We expect overall foodservice inflation to continue to moderate as we go through the year and for calendar Q4 to come closer to a more normal rate of 3%.