Shopping for groceries should inflict less pain on Americans' pocketbooks in the year ahead.
People should get some relief from food inflation in 2024, as the costs of basics like sugar, coffee, corn, and soybeans are poised to ease after three years of surging higher, according to a report by Rabobank. Increased supplies will help put the brakes on escalating costs even as consumer demand remains tepid, with people still grappling with elevated inflation and interest rates, the bank said.
Not all food staple costs are expected to ease, with weather and possible restrictions on Russian exports likely to keep wheat prices elevated, Rabobank analysts said.
"The main beneficiaries of a downward trend in agri commodities should be baking, dairy, and animal protein producers, who can expect lower prices for grain-and-oilseed-heavy ingredients," they state.
Food commodity prices are ebbing after being stirred up by the pandemic, extreme weather, and Russia's invasion of Ukraine, with a United Nations measure of global prices down nearly 11% in September from a year earlier. But those lower costs aren't yet being felt in any meaningful way at grocery stores, where higher energy and labor expenses are also part of the equation.
According to recent government data, the cost of filling up grocery carts is showing signs of easing, despite the steady rise in food prices since 2020. In October, food prices were up 2.4% from a year ago, just slightly above the Federal Reserve's 2% inflation target.
However, consumers are not completely in the clear yet. Prices for beef, veal, and frozen vegetables saw an increase of at least 10% in October compared to the previous year. On the other hand, the price of eggs fell by nearly 24% during the same period. Other food products that are now cheaper than a year ago include bacon, sausage, ham, and lunch meats.
