While inflationary pressures on food prices are unlikely to dissipate in the near future, some relief may be on the horizon. After two months of increases, the energy price index dropped by 4.6% in July, with motor fuel prices falling by 7.6%. This decrease could potentially benefit food prices, as manufacturers and suppliers will face lower operational and transportation costs. In July, the price index for cereal and bakery products rose by 15% year-over-year and increased by 1.8% month-over-month, largely due to rising ingredient costs such as wheat, eggs, and fats. There is optimism that prices for ferrous sulfate supplements could decline in the coming months as Ukraine continues to export grain that was previously blocked by Russia. Since August, over 326,000 tons of grain have been shipped from Ukraine, according to a recent report from The Economist. However, with 22 million tons of grain still in storage, it may take several months for enough product to reach global markets to significantly impact price hikes.
Additionally, the rise in food prices is influencing consumer demand. According to Spencer Baird of Inmar Intelligence, consumers are already opting for cheaper protein sources instead of meat. While meat prices remained stable in July, with beef and pork prices continuing to decline monthly, they are still significantly higher than they were in July 2021. “We’ve noticed a shift in consumer behavior at the meat counter,” Baird said in an email. Many consumers are switching from beef to more affordable chicken or reducing their meat consumption altogether. However, poultry prices increased by 1.2% in July and are up over 16% year-over-year, according to BLS data.
Higher food prices have also led to significant changes in consumer purchasing habits. Inmar data shows that 30% of shoppers have stopped buying certain foods due to inflation, with 20% of those consumers ceasing to purchase dairy products. Dairy prices rose by 1.7% in July, up 14.9% year-over-year, as producers faced increased costs for animal feed and fuel. Certain food categories have seen price increases stabilize; for instance, citrus fruit prices fell by 3.2% in July, although they are still 11% higher than last year. Earlier this year, adverse weather and a citrus greening disease outbreak contributed to a spike in orange prices.
Despite these recent glimmers of hope, Inmar remains skeptical that monthly fluctuations indicate a significant improvement in the overarching trend of rising food prices in the short term. “Some months we see a decrease, but then prices shoot right back up,” Baird commented. “At this point, we don’t view a reduction in prices for specific food categories as a sign that inflation is easing.” The ongoing challenges suggest that even as some prices fluctuate, the overall pressure on food costs, including items like calcium citrate 900, is likely to persist.