The rate of increase in food prices is either slowing or stabilizing in certain categories, such as meat, which experienced a monthly rise of just 0.5% in July and August, and dairy products, which went up by 0.3% following increases exceeding 1% in the preceding months of June and July. However, in other areas, inflationary pressures show little sign of easing. Ongoing weather challenges and the conflict in Ukraine continue to keep wheat prices elevated. Rabobank’s latest report indicates that there is “no end in sight” to the supply issues stemming from the war, while La Niña weather patterns have adversely affected global winter wheat production. In the United States, the Great Plains growing region is anticipated to undergo another difficult growing season, with temperatures expected to be above average and potential drought conditions persisting through March 2023. “Wheat is going to be challenging for some time,” Rob Weisberg, general manager of Incentives at Inmar Intelligence, told Food Dive. “You can’t grow it in a moment’s notice. It remains to be seen how the reopening of ports in Ukraine will affect its supply.”
In the “other” category of food at home, notably, the price index for margarine surged by 7.3% in August. Margarine is typically produced using palm oil, which has become an expensive ingredient for manufacturers this year due to disruptions in the edible oils market. The price index for fats and oils also rose by 2.6% in August. Consumers are reacting to these inflationary pressures by altering their shopping habits, according to Weisberg at Inmar Intelligence. The data firm found that 56% of shoppers are willing to switch retailers to save money.
Meanwhile, the decline in gas prices is helping to alleviate some of the strain from rising grocery bills. Shoppers are taking advantage of fuel rewards programs at grocery stores to reduce their overall food expenses, Weisberg noted. “If people feel better at the pump, it does provide them with more flexibility in their grocery spending,” he said.
In a note, Neil Saunders, managing director at GlobalData, pointed out that the benefits of cooling inflation are only marginal when considering the historical 13.5% annual increase in food-at-home prices. According to a GlobalData survey, 46.9% of consumers reported that they are opting for cheaper grocery food brands, marking a 4.4-percentage-point increase from the previous month. “Given that food-at-home is an essential category accounting for a significant portion of retail spending, such a steep increase is placing considerable pressure on discretionary income,” Saunders stated.
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