Prices for milk, bread, beef will stay volatile in 2024, but overall food inflation should slow, experts say
Overall, food price increases are expected to slow, experts say. Credit: Newsday / Steve Pfost
Ever since the pandemic wreaked havoc on supply chains in 2020, a trip to the grocery store has been like lining up for a seat on a roller coaster, then finding much of the ride involves being stuck at the top — of pricing.
So, we asked experts what started this volatile ride, what point we are at in this journey, and what might be ahead for 2024. We found that even they couldn’t predict all the ups and downs that might come, though they agree the roller coaster will at least slow down.
Most of the authorities interviewed say the cost of some groceries, like eggs — which have headed the list of price hikes — have stabilized for now, but pre-pandemic prices largely aren’t expected to return. And some forecast more cost increases for at least part of next year for products such as cereal, bread, meat, salmon, dairy, processed fruits and vegetables and fats or oils.
All agree that in addition to the pandemic, a combination of factors — including inflation, animal disease, weather, climate change and political events such as war — have led to historically high prices for groceries in the past three years. And those factors make anticipating their future costs difficult, with any one of them having the ability to change product availability and pricing overnight.
“Global trade helps make food affordable around the world, but it also means food prices can be impacted by economic, climate and geopolitical events happening everywhere,” explained NerdWallet data analyst Elizabeth Renter.
Shoppers are feeling the pain of high grocery prices, "and their behavior is reflecting that,” said Chloe Riley, executive editor of Supermarket News, a trade publication. Recent data show that 83% of shoppers have made one or more changes to their grocery shopping habits due to high prices, with 55% looking for specials more often and 45% cutting back on non-essentials, she said.
What do the experts think your 2024 grocery costs might look like?
"Food prices are likely to rise, albeit more slowly than they have over the past few years,” said Renter. Grocery inflation peaked at 13.5% in August 2022, but has been falling since then as supply chains unsnarled, she said.
“Food prices are notoriously volatile in the shorter term, which means you may see prices rise and then fall for some foods in some months of the year. However, over the course of the year, shoppers can expect them to climb overall,” Renter added.
Federal pricing analysts from the U.S. Department of Agriculture also project some food prices will continue to rise through 2024.
The USDA referenced the U.S. Bureau of Labor Statistics price index, which showed that overall consumer prices were up 3.2% in September compared to a year ago. Food prices rose more rapidly at 4.9% during that period, and the USDA says increases will continue.
“Food prices are expected to continue to decelerate but not decline in 2024,” the USDA said. “In 2024, all food prices are predicted to increase 2.1% ... and food-away-from-home [restaurant] prices are predicted to increase 5.1%."
Bradley J. Rickard, professor of food and agricultural economics at Cornell University, sees 2024 bringing more stability.
“Overall, there are predictions that [grocery] food prices will stabilize in 2024 and that food inflation rates will return to levels we saw before 2021 — that is, annual food inflation in the range of 2 to 3 percent,” Rickard said. He said inflation is expected to be a bit higher for restaurant and takeout food, partly because "labor is a higher share of the final cost ... and labor costs are an input cost that continues to rise.”
Rickard said cost hikes to watch for include those for eggs, meat, dairy, cereal, baked goods, processed fruits and vegetables and fats or oils.
“There are different reasons for the increases across categories, but much of it is due to all input costs — labor, fertilizer, transportation and fuel, packaging and other logistical costs,” Rickard added. “Egg prices were further impacted by the rise of the avian flu in 2022.”
Nearly 5 million chickens, turkeys and other birds have been slaughtered this year due to the persistent bird flu outbreak that started in 2022, but it was far less than the almost 58 million the USDA said were killed in the outbreak year.
There is concern, however, that the infections continue and that different from other outbreaks, the current virus can survive through summers, so it is believed that poultry now will always be at risk of the disease, and therefore higher pricing.
“We wish we had a crystal ball to be able to see how prices will be affected in 2024,” said Tom Flocco, CEO of egg distributor Pete & Gerry’s. “We are watching the recent onset of avian influenza very closely.”
Flocco said that in 2020, egg prices remained “fairly steady” at an average of $1.50 a dozen, then they spiked to around $2 immediately following COVID lockdowns before eventually leveling out at under $1.50. Prices rose in 2021 to an average of $1.67 for a dozen eggs, with a peak price of more than $1.80 in September, he said. Egg price increases continued in 2022, when they went up to nearly $3 — first surpassing $2 in February 2022, and then prices rose to over $4.20 by the end of the year.
“While prices were still high in early 2023, they began to steadily fall and are now sitting at just over $2.50,” Flocco noted. Still, he said, “The impacts of inflation are being felt across the grocery store, and costs of goods continues to increase. As a result, egg prices are not likely to drop to pre-pandemic levels.”
Tom Bundgaard, chief analyst for Mintec, an independent provider of global commodity price data, said grocery costs will continue to be up and down in 2024, with salmon being “the biggest threat,” with a projected increase of 30% to 50% because “prices are unsustainably low right now.” He predicted pork prices will jump 35% to 50%.
Where’s the beef in all of this? Headed uphill too, according to Renter. “The costs associated with feeding cattle are a big component in the cost of beef,” she said. “In 2024, we’re likely to see the ongoing impact of severe drought in corn-growing regions of the U.S. drive prices upwards.”
Bundgaard said rice has seen historically high prices — “almost at their peak” — and there will be a slight increase “but not anything big,” and the same will happen into spring for cooking oils and corn.
“The CPI (Consumer Price Index) has been falling since June 2022 ... but for 2024 the CPI will start to rise again, likely in early 2024, followed by a new decline," Bundgaard added. “Roller coaster is the word.”
There is simply a lot impacting groceries on a shopping list today and those factors will likely remain with us in at least the near future, noted Stacey Finkelstein, professor and area head of marketing at Stony Brook University College of Business.
“Food prices increase anytime there are supply chain disruptions,” Finkelstein said. "Of course, when we think of the last few years, the pandemic is top of mind. But there are many other factors driving inflation currently, including war abroad in Ukraine and in the Middle East, changing climate patterns, and animals in densely-populated conditions becoming ill with avian flu.”
Finkelstein noted that after the war in Ukraine began, Russia withdrew from the Black Sea Initiative, which allowed Ukraine to export grain, with a decrease in supply coupled with maintained demand creating grain shortages worldwide.
“Changing climate patterns can impact crops, change in rain patterns — too much or too little — can impact growing conditions and decrease the available supply of produce,” Finkelstein noted. “In some cases, supply may be maintained but the produce itself will look different from what consumers are used to, thus decreasing the appetizing produce.”
Any losses producers experience are typically passed on to the consumer in the form of higher prices. Once those higher prices are baked in, stores and manufacturers know shoppers will get accustomed to paying increased costs so the prices are not lowered, just perhaps stabilized.
Referring to USDA forecasts, Finkelstein said stabilization is expected with poultry, eggs and dairy next year — with price increases kept below 1% — while price hikes for cereals and baked goods appear to be upwards of 8%.
“There is a lag from the time dairy or egg prices stabilize" to when baked goods producers feel those reduced costs and lower prices for consumers, Finkelstein explained.
She added, “There may be decreases down the road, or prices may stay high and we will see manufacturers and retailers offer more promotions, like discounts ... to achieve lower prices without changing the sticker price of an item.”
Finkelstein added she sees climate change “as a common thread here" affecting pricing in 2024. “We may expect that things like import bans [salmon for the United States], export bans [India and rice] and increased regulation [India] will be the new norm,” she said.
One expert asked if all the talk and concern about grocery food prices and their recent ups and downs might be misguided.
“A myth is that grocery is still driving inflation numbers now,” said Sucharita Kodali, a retail analyst at Forrester Research Inc., a Cambridge, Massachusetts-based advisory firm. “The things that are driving inflation now are restaurant [prices], shelter and higher rents, and some commodities like over-the-counter drugs.”
Kodali said that while prices for some grocery items like some breads and meats are outpacing inflation, they will likely come down. She says there are ways to make a trip to the supermarket cause less anxiety through adjusting buying habits. Shoppers can replace some products with cheaper alternatives, and it looks like that’s happening more and more.
“Consumers appear to be trading away from anything that seems mispriced. There’s plenty of choice in grocery,” Kodali said. “If not bread, then pasta or another grain may be a better choice. If not steak, then chicken.”
She added, “Grocery prices are very visible to consumers, so even a few high-priced items create the impression prices are high, but that isn’t necessarily the case when the full basket is calculated.”
Ever since the pandemic wreaked havoc on supply chains in 2020, a trip to the grocery store has been like lining up for a seat on a roller coaster, then finding much of the ride involves being stuck at the top — of pricing.
So, we asked experts what started this volatile ride, what point we are at in this journey, and what might be ahead for 2024. We found that even they couldn’t predict all the ups and downs that might come, though they agree the roller coaster will at least slow down.
Most of the authorities interviewed say the cost of some groceries, like eggs — which have headed the list of price hikes — have stabilized for now, but pre-pandemic prices largely aren’t expected to return. And some forecast more cost increases for at least part of next year for products such as cereal, bread, meat, salmon, dairy, processed fruits and vegetables and fats or oils.
All agree that in addition to the pandemic, a combination of factors — including inflation, animal disease, weather, climate change and political events such as war — have led to historically high prices for groceries in the past three years. And those factors make anticipating their future costs difficult, with any one of them having the ability to change product availability and pricing overnight.
“Global trade helps make food affordable around the world, but it also means food prices can be impacted by economic, climate and geopolitical events happening everywhere,” explained NerdWallet data analyst Elizabeth Renter.
Shoppers are feeling the pain of high grocery prices, "and their behavior is reflecting that,” said Chloe Riley, executive editor of Supermarket News, a trade publication. Recent data show that 83% of shoppers have made one or more changes to their grocery shopping habits due to high prices, with 55% looking for specials more often and 45% cutting back on non-essentials, she said.
What do the experts think your 2024 grocery costs might look like?
"Food prices are likely to rise, albeit more slowly than they have over the past few years,” said Renter. Grocery inflation peaked at 13.5% in August 2022, but has been falling since then as supply chains unsnarled, she said.
Milk
- Expect volatility in milk prices for 2024.
- Prices for cheese, butter and other dairy products will fluctuate as well.
- Drought in some milk-producing areas caused soil moisture and pasture challenges all summer.
Milk supply issues probably get worse before they get better, which supports higher dairy market prices.
—Ben Buckner, dairy and crops analyst for AgResource Co.
Overall, prices still headed up
“Food prices are notoriously volatile in the shorter term, which means you may see prices rise and then fall for some foods in some months of the year. However, over the course of the year, shoppers can expect them to climb overall,” Renter added.
Federal pricing analysts from the U.S. Department of Agriculture also project some food prices will continue to rise through 2024.
The USDA referenced the U.S. Bureau of Labor Statistics price index, which showed that overall consumer prices were up 3.2% in September compared to a year ago. Food prices rose more rapidly at 4.9% during that period, and the USDA says increases will continue.
“Food prices are expected to continue to decelerate but not decline in 2024,” the USDA said. “In 2024, all food prices are predicted to increase 2.1% ... and food-away-from-home [restaurant] prices are predicted to increase 5.1%."
Bradley J. Rickard, professor of food and agricultural economics at Cornell University, sees 2024 bringing more stability.
“Overall, there are predictions that [grocery] food prices will stabilize in 2024 and that food inflation rates will return to levels we saw before 2021 — that is, annual food inflation in the range of 2 to 3 percent,” Rickard said. He said inflation is expected to be a bit higher for restaurant and takeout food, partly because "labor is a higher share of the final cost ... and labor costs are an input cost that continues to rise.”
Rickard said cost hikes to watch for include those for eggs, meat, dairy, cereal, baked goods, processed fruits and vegetables and fats or oils.
“There are different reasons for the increases across categories, but much of it is due to all input costs — labor, fertilizer, transportation and fuel, packaging and other logistical costs,” Rickard added. “Egg prices were further impacted by the rise of the avian flu in 2022.”
Poultry and Eggs
- An avian flu outbreak that started in 2022 and resulted in the slaughter of more than 60 million chickens, turkeys and other birds, has been considered under control.
- Concerns remain that a possible fierce return of the illness could cause poultry and egg prices to skyrocket again.
- The newest strain can survive through summers so there’s increased risk of this “bird flu” becoming an extended problem.
We wish we had a crystal ball to be able to see how prices will be affected ... We are watching the recent onset of avian influenza very closely.
—Tom Flocco, CEO of egg distributor Pete & Gerry’s
Watching for avian flu impact
Nearly 5 million chickens, turkeys and other birds have been slaughtered this year due to the persistent bird flu outbreak that started in 2022, but it was far less than the almost 58 million the USDA said were killed in the outbreak year.
There is concern, however, that the infections continue and that different from other outbreaks, the current virus can survive through summers, so it is believed that poultry now will always be at risk of the disease, and therefore higher pricing.
“We wish we had a crystal ball to be able to see how prices will be affected in 2024,” said Tom Flocco, CEO of egg distributor Pete & Gerry’s. “We are watching the recent onset of avian influenza very closely.”
Flocco said that in 2020, egg prices remained “fairly steady” at an average of $1.50 a dozen, then they spiked to around $2 immediately following COVID lockdowns before eventually leveling out at under $1.50. Prices rose in 2021 to an average of $1.67 for a dozen eggs, with a peak price of more than $1.80 in September, he said. Egg price increases continued in 2022, when they went up to nearly $3 — first surpassing $2 in February 2022, and then prices rose to over $4.20 by the end of the year.
“While prices were still high in early 2023, they began to steadily fall and are now sitting at just over $2.50,” Flocco noted. Still, he said, “The impacts of inflation are being felt across the grocery store, and costs of goods continues to increase. As a result, egg prices are not likely to drop to pre-pandemic levels.”
Tom Bundgaard, chief analyst for Mintec, an independent provider of global commodity price data, said grocery costs will continue to be up and down in 2024, with salmon being “the biggest threat,” with a projected increase of 30% to 50% because “prices are unsustainably low right now.” He predicted pork prices will jump 35% to 50%.
Beef
- Drought conditions in recent years have caused beef prices to rise.
- Hikes are expected to continue into next year.
- With a reduction in resources such as hay and feed, the cattle supply has been reduced to levels that make it difficult to meet the continued demand.
The costs associated with feeding cattle are a big component ... we’re likely to see the ongoing impact of severe drought drive prices upwards.
—NerdWallet data analyst Elizabeth Renter
Where’s the beef in all of this? Headed uphill too, according to Renter. “The costs associated with feeding cattle are a big component in the cost of beef,” she said. “In 2024, we’re likely to see the ongoing impact of severe drought in corn-growing regions of the U.S. drive prices upwards.”
Bundgaard said rice has seen historically high prices — “almost at their peak” — and there will be a slight increase “but not anything big,” and the same will happen into spring for cooking oils and corn.
“The CPI (Consumer Price Index) has been falling since June 2022 ... but for 2024 the CPI will start to rise again, likely in early 2024, followed by a new decline," Bundgaard added. “Roller coaster is the word.”
Cooking oil
- Cooking oil prices are predicted to be higher for at least part of 2024, though they’re not expected to be among the worst increases.
- Keeping up with an adequate supply of this product to meet demand will be challenging.
- Some countries such as Indonesia have banned the export of palm oil to maintain supply nationally, while Mediterranean producers have faced significant droughts.
Because of their widespread usage in products besides cooking, demand for cooking oils outstrips supply currently.
—Stacey Finkelstein, professor of marketing at Stony Brook University College of Business
Climate change, wars driving inflation
There is simply a lot impacting groceries on a shopping list today and those factors will likely remain with us in at least the near future, noted Stacey Finkelstein, professor and area head of marketing at Stony Brook University College of Business.
“Food prices increase anytime there are supply chain disruptions,” Finkelstein said. "Of course, when we think of the last few years, the pandemic is top of mind. But there are many other factors driving inflation currently, including war abroad in Ukraine and in the Middle East, changing climate patterns, and animals in densely-populated conditions becoming ill with avian flu.”
Finkelstein noted that after the war in Ukraine began, Russia withdrew from the Black Sea Initiative, which allowed Ukraine to export grain, with a decrease in supply coupled with maintained demand creating grain shortages worldwide.
“Changing climate patterns can impact crops, change in rain patterns — too much or too little — can impact growing conditions and decrease the available supply of produce,” Finkelstein noted. “In some cases, supply may be maintained but the produce itself will look different from what consumers are used to, thus decreasing the appetizing produce.”
Any losses producers experience are typically passed on to the consumer in the form of higher prices. Once those higher prices are baked in, stores and manufacturers know shoppers will get accustomed to paying increased costs so the prices are not lowered, just perhaps stabilized.
Referring to USDA forecasts, Finkelstein said stabilization is expected with poultry, eggs and dairy next year — with price increases kept below 1% — while price hikes for cereals and baked goods appear to be upwards of 8%.
“There is a lag from the time dairy or egg prices stabilize" to when baked goods producers feel those reduced costs and lower prices for consumers, Finkelstein explained.
She added, “There may be decreases down the road, or prices may stay high and we will see manufacturers and retailers offer more promotions, like discounts ... to achieve lower prices without changing the sticker price of an item.”
Finkelstein added she sees climate change “as a common thread here" affecting pricing in 2024. “We may expect that things like import bans [salmon for the United States], export bans [India and rice] and increased regulation [India] will be the new norm,” she said.
One expert asked if all the talk and concern about grocery food prices and their recent ups and downs might be misguided.
Bread
- This grocery staple’s price is one of the clearest examples of how global political events affect grocery costs here in the U.S.
- Spikes in this category could happen for similar reasons again in 2024, experts say.
- In June the price of bread jumped 11.5% – nearly four times higher than overall inflation.
Food prices increase anytime there are supply chain disruptions ... a decrease in supply coupled with maintained demand creates grain shortages worldwide.
—Stacey Finkelstein, professor of marketing at Stony Brook University College of Business
“A myth is that grocery is still driving inflation numbers now,” said Sucharita Kodali, a retail analyst at Forrester Research Inc., a Cambridge, Massachusetts-based advisory firm. “The things that are driving inflation now are restaurant [prices], shelter and higher rents, and some commodities like over-the-counter drugs.”
Kodali said that while prices for some grocery items like some breads and meats are outpacing inflation, they will likely come down. She says there are ways to make a trip to the supermarket cause less anxiety through adjusting buying habits. Shoppers can replace some products with cheaper alternatives, and it looks like that’s happening more and more.
“Consumers appear to be trading away from anything that seems mispriced. There’s plenty of choice in grocery,” Kodali said. “If not bread, then pasta or another grain may be a better choice. If not steak, then chicken.”
She added, “Grocery prices are very visible to consumers, so even a few high-priced items create the impression prices are high, but that isn’t necessarily the case when the full basket is calculated.”
