As 2024 nears the midway mark, many consumers are grappling with the persistent issue of rising food prices. While inflation has been easing downward, many food prices remain stubborn or even continue to climb.
“In 2024, all food prices are predicted to increase 2.2 percent, with a prediction interval of 0.7 to 3.8 percent,” said the USDA Economic Research Service in April.
The level of food price inflation varies depending on whether the food was purchased for consumption at home or away from home:
- The food-at-home (grocery store or supermarket food purchases) CPI was unchanged from February 2024 to March 2024 and was 1.2 percent higher than in March 2023; and
- The food-away-from-home (restaurant purchases) CPI increased 0.3 percent in March 2024 and was 4.2 percent higher than in March 2023.
Rising food prices may seem like a disconnect to consumers when their news feed is fed stories of easing overall inflation.
“Americans are finally getting a break from inflation, with prices for gasoline, used cars and health insurance all falling over the past year, relieving families … But prices painfully remain high for one particularly frequent purchase: groceries,” reported The Washington Post in February. “Grocery prices have jumped by 25 percent over the past four years, outpacing overall inflation of 19 percent during the same period. And while prices of appliances, smartphones and a smattering of other goods have declined, groceries got slightly more expensive last year, with particularly sharp jumps for beef, sugar, and juice, among other items.”
Let’s explore the factors behind these rising food prices, including a closer look at the link between extreme weather events and food inflation. Additionally, we will discuss which foods could see price increases or become harder to find this year and why.
Factors Behind Rising Food Prices
Several key factors contribute to the ongoing issue of rising food prices:
- Climate Change and Extreme Weather Events
A recent study published in the journal Communications Earth & Environment has found a strong correlation between changes in average monthly temperatures and food inflation. Extreme weather events, such as droughts, floods, and heat waves, can disrupt agricultural productivity, leading to reduced crop yields and higher prices. The study suggests that both high and low-income countries will experience climate-driven inflation, with countries in the global south, particularly in Africa and South America, being more severely affected.
- Rising Costs of Animal Feed
The escalating costs of animal feed, caused by grain growth issues and extreme weather events, are driving up prices for meat, poultry, and dairy products. As farmers struggle to maintain profitability in the face of these higher costs, consumers can expect to see price increases in these categories.
- Labor Shortages
Labor shortages in the agricultural and food processing sectors are also contributing to rising food prices. With fewer workers available to harvest crops, process food, and transport goods, the overall cost of bringing food to market increases.
- Global Conflicts and Trade Tensions
Geopolitical events, such as Russia's invasion of Ukraine, can disrupt global food supply chains and drive up prices for staples like wheat. International trade tensions can also lead to tariffs and other barriers that make imported food more expensive.
The Link Between Extreme Weather and Food Inflation
The study published in Communications Earth & Environment highlights the significant impact that extreme weather events can have on food prices.
“Researchers at the Potsdam Institute for Climate Impact Research in Germany looked at historical food prices in different categories of food goods across countries around the world to explore how fluctuations in different climatic conditions have historically impacted food inflation as well as the implications of future climate change,” Max Kotz, lead author of the study, told ABC News.
Researchers found that increases in average monthly temperatures during the hottest months of the year cause upward inflationary pressures, while the opposite occurs when temperatures rise during typically colder months in higher latitudes.
In lower latitudes, increases in average monthly temperatures lead to higher food inflation year-round.
The study also found that excessive wet conditions can trigger persistent inflation, while the impact of dry conditions tends to be more short-term.
As climate change continues to intensify extreme weather events, we can expect to see more frequent and severe disruptions to agricultural productivity, leading to higher food prices in the coming years.
"There are likely going to be substantial impacts of future climate change on food prices across the world," Kotz said.
Foods That Could Rise in Price or Become Harder to Find
Last year was not a fun year for consumers at the grocery store.
“If you’re sick of being blindsided by inflated price tags at the grocery store, you’re not alone—volatile prices and frequent shortages made 2023 a tough year for food shoppers,” says Better Homes & Gardens. “Though pandemic-era inflation eased slowly this year, certain products still spiked in price, leaving families to improvise their weekly shops. Plus, global conflicts and extreme weather events made certain foods more expensive or increasingly sparse throughout the year.”
Several categories of food – highlighted by Faith Geiger in a SheFinds article -- continue to be at risk of higher prices and lower availability in 2024:
- Dairy Products: Rising feed costs, labor shortages, and extreme weather events are stressing dairy production, which could lead to higher prices and limited availability.
- Eggs: While prices have moderated since the record highs of 2022, ongoing challenges like avian flu outbreaks and rising feed costs could keep egg prices elevated and supply limited.
- Fresh Produce: Climate change, rising fuel costs, labor shortages, and international trade tensions are all impacting the quality, variety, and quantity of available fresh produce.
- Grains: Climate change, soil degradation, and pest infestations are affecting grain harvests, which could lead to higher prices for staples like rice and wheat.
- Meat and Poultry: Increasing animal feed costs and the prevalence of diseases like avian flu and swine fever are driving up prices and reducing availability in the meat and poultry categories.
- Seafood: climate change, overfishing, and water pollution are impacting the quality of seafood as well as fish populations, making it more difficult to find affordable, sustainable options.
- Spices: Climate issues in countries like India and Vietnam are leading to scarcity in staples like black pepper, cinnamon, garlic powder, pepper, and nutmeg.
Staying Ahead of the Curve in the Wholesale Distribution Industry
As we navigate the changing tides of grocery shopping in 2024, it's clear that a combination of factors, including climate change, labor shortages, and global conflicts, are contributing to rising food prices and potential shortages.
By staying informed about these issues and exploring alternative options, such as plant-based proteins, sustainably sourced seafood, and locally grown produce, consumers can make more resilient and adaptable choices in the face of these challenges.
At FreshByte Software, we understand the importance of staying ahead of the curve in the wholesale distribution industry. Our software solutions are designed to help businesses navigate the complexities of supply chain management, inventory control, and pricing strategies in an ever-changing market.
By leveraging the power of technology and data-driven insights, we enable our clients to make informed decisions and adapt to the evolving landscape of food distribution.
