Food inflation rate continues to moderate
A food economist says food inflation continues to ease.
David Ortega with Michigan State University says while prices are up, they are headed in the right direction. “Food prices right now are 4.3% more expensive than they were a year ago,” he says. “But it’s important to keep things in perspective. We reached peak food price inflation in August of last year, we’ve come down quite a ways from those highs.” In August 2022, food prices rose 11.3 percent from the previous year, through August of this year food prices rose 4.3 percent, down from 4.9 percent in July.
He tells Brownfield the food industry is still facing inflationary pressures. “The price of gas, the price of energy is increasing, and that’s contributed to the uptick and the overall inflation number,” he says. “Depending on how that evolves over the next couple of months, that can sort of feed into increased food prices through transportation and other areas down the road.”
Ortega says egg prices continue their price decline. “End of last year, in December and in January of this year, we saw record price increases for eggs,” he says. “Those have largely come down quite substantially.”
But he says he doesn’t expect a big surge in food prices anytime soon. However, a major supply shock or an outbreak like highly pathogenic avian influenza could change that.
Ortega says the food inflation rate (year-over-year) is the lowest in almost 2 years. “One thing that I will add, and this is important and I think it gets lost in a lot of the narrative surrounding food price inflation,” he says. “Is that’s when we talk about inflation, that is a rate of increase in prices. So just because that rate of increase starts to come down, it doesn’t mean prices are coming down.” Ortega says it’s more the fact that prices aren’t increasing as quickly. “Generally, even before all of those disruptions from COVID and supply chain issues, food prices generally tend to increase over time. For the few years before those disruptions, food price inflation was around, 2 to 2.5%. And that’s just because of the general nature of the economy. We shouldn’t expect prices to go back to the pre-pandemic levels. In some cases where we’ve had acute shocks like egg prices with the highly pathogenic avian influenza outbreaks, we’ve seen egg prices come down. That was sort of an acute shock.”
AUDIO: David Ortega, Michigan State University