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Over the past few months, each time I’ve entered a supermarket, I’ve found my jaw clenching as I steel myself for the outlandish price of food. How much will cereal be this week? What about eggs? It’s one banana—what could it cost? Ten dollars? Potentially! If you live in the US, you know what I’m talking about: the supermarket scaries.
Grocery prices have, to put it mildly, become buck wild. This began in 2020, when COVID decimated supply chains, driving up prices for just about everything. Since then we’ve been on a roller-coaster ride of grocery pricing. Costs have skyrocketed, sank, evened out, been falsely inflated (more on that later), and been subject to the effects of climate events and unpredictable disease.
Even today, three years later, headlines across the internet paint a confusing, sometimes contradictory picture of grocery pricing. So you’re probably wondering the same thing that I am: What is actually going on with grocery prices? Why are they up, down, and all around? And when will paying for groceries begin to feel normal again?
I turned to the experts for answers. The short of it: Rampant inflation, global supply issues, and unpredictable weather and disease all impact the price fluctuations. But it wasn’t all bad news—there may be some signs of prices evening out soon.
First, some context: how inflation has pushed prices over the last three years
To understand the way grocery prices have been fluctuating in recent months, it’s important to first understand the larger context of grocery pricing. Supermarket pricing has been a victim of inflation, or what’s essentially a loss of purchasing power. In the last 12 months alone, prices have increased 4%. And last year set us up particularly poorly. Chloe Riley, executive editor of Supermarket News, a grocery trade publication, says that 2022 saw price grocery costs increase at an almost unprecedented rate. According to the US Department of Agriculture, prices for food at home rose 11.4% last year—and that’s after spikes of 3.5% in both 2020 and 2021. “In 2022, US consumers saw the largest annual increase in food prices since the 1980s,” Riley says. For context, pre-2020, the last time grocery prices rose more than a full percent in a year was in 2014, when they rose by 3.7%.
But some price hikes, like with grains and eggs, were due to unpredictable events
But inflation is only part of the story. Riley says the recent spikes are due to a perfect storm of inflation, higher household incomes, engorged transportation costs, and unforeseeable hits to the agriculture industry.
The conflict in Ukraine drove up the price of grains to near record levels. Between 2021 and 2022 wheat prices rose an eye-popping 110%, according to the USDA, at first due to increased demand in the economic rebound after the worst of the pandemic, and then due to tightening export restrictions from the war in Ukraine. Drought across the US didn’t help, as The Washington Post reported in September of 2022. Crops across the country suffered, Laura Reiley of the Post wrote, and American corn was set to produce its lowest yield in a decade. This scarcity, political uncertainty, and international trade restrictions meant that supply was down and costs went up.
Then eggs became the poster child for inflated grocery prices in late 2022, when a mass outbreak of the highly contagious bird flu forced poultry farmers to cull their chicken population. The initial outbreak was discovered in February of 2022, and it grew to infect more than 50 million birds (which also explains why last year’s Thanksgiving turkey was so expensive). As Phyllis Rothschild, CMO of egg distributor Pete and Gerry’s, told me, “Those hens would have averaged approximately 5.5 eggs laid per week, so that works out to about 27 to 28 million dozen, per week, missing on the shelf.”
But like many other produce and livestock products, Rothschild says, egg prices also rose because of higher input costs—that is, the price of things that go into raising a hen, like feed and labor. Now, egg prices have fallen down to more reasonable levels. “There's still fluctuations and periodic increases,” Rothschild says, “but they're definitely down from their previous highs that we saw, let’s say, in January.”
Some claim high prices are the result of good old-fashioned corporate greed
Producers and sellers of food claim that increased costs from inflation and factors like higher wages are driving up prices, but in reality wages are not keeping pace with inflation. Though higher wages might be responsible for a slightly higher price for consumers, the increase in retail cost for items is often rising higher than employee wages. In fact, many food producers have been accused of raising costs simply because they can. “Corporations have used inflation, the pandemic, and supply chain challenges as an excuse to exaggerate their own costs and then nickel-and-dime consumers,” Kyle Herrig, president of watchdog organization Accountable.us, alleged to The New York Times. In 2022, the average price of potato chips was $5.26 in January. By December of that year that number had increased to $6.28. Meanwhile, the Times reported, PepsiCo, the owner of Frito-Lay, increased profits by 20% in its third quarter alone.
Positive news: Prices have started to even out, with some notable exceptions
Suffice it to say there’s a lot of things that contribute to grocery prices, and they’re all interlinked. So where do we stand now? Overall, grocery prices won't be increasing in the way we saw last year, though there may still be slight increases, as there were in May. Because those price increases are on top of the unusually high price hikes of 2022, you may still experience some sticker shock—sorry—supermarket scaries.
Some grocery staples could still see outlandish price hikes. Beef, for example, already a pricier grocery item, will likely increase in the near future due to a shrinking supply of cattle across the country, according to a report in The Wall Street Journal. Drought, the pandemic, and cost increases have brought “the number of cattle in the US to its lowest level in nearly a decade,” the report says. Disease and hurricanes have hurt the orange crop in Florida, so oranges and orange juice will likely continue to get even more expensive than the 17.5% hike we’ve seen this year. Unusual weather has also hurt the peach crop, so expect to pay about 25% more there as well, Lee Dickey, a farmer in Georgia, told The Takeout, a website .
Grocery inflation will probably start feeling less exorbitant next year at the earliest
It’s impossible to predict how grocery prices will shake out with a hundred percent accuracy. Extreme climate events like drought can always pop up and make prices go haywire. But Bradley Rickard, a professor of food and agricultural economics at Cornell University, notes that we’re seeing grocery price hikes slow as the factors that pushed them higher relax—like livestock diseases, and overall inflation. “We've started to see, more recently, a relaxation in most of these pressures on cost: machinery, fuel, labor, and cost of feed, in the case of animal products,” he says. “And so we're starting to see these new prices, most noticeably for eggs, fall.” Data from the Bureau of Labor Statistics show the average price of a dozen eggs was $2.67 in May, down from $4.82 in January.
The USDA predicts we’ll see an overall price raise of 6.3% in 2023—higher than average, but not as bad as the more than 11% increases we saw last year. Rickard suggests we might return to a more normal price increase rate of approximately 3% in 2024 or 2025. Is there an immediate solution in the meantime? Perhaps not—though may we humbly suggest Grocery Outlet Bargain Market?