Food is generally seen as an inelastic commodity, which means that demand tends to remain relatively stable even when prices increase. This stability arises because food purchases constitute a small fraction of a household’s total expenditures. For instance, the cost of flour in a loaf of bread accounts for only a minor portion of the overall price. Even when flour prices reached $10 per bushel in 2008, the flour in a 1.5-pound loaf amounted to about 25 cents. Despite significant price increases in recent months, current costs remain approximately half of what they were in 2008.
For manufacturers reliant on flour, significant price fluctuations do impact their operations, and some of these costs inevitably trickle down to consumers. However, a minor increase of a few cents in the price of a loaf of bread or a box of ready-to-eat cereal is unlikely to significantly alter consumer demand in the United States. This stands in stark contrast to more volatile commodities like beef or gasoline, where prices can fluctuate rapidly and are immediately felt at retail outlets within days or weeks.
In theory, businesses could stockpile supplies when prices are low, but this approach is impractical—it’s nearly impossible to predict when prices have truly hit their lowest point—and most manufacturers lack the necessary storage capacity for long-term commodity retention. Additionally, despite lower gluten levels in this year’s hard winter wheat harvest, some manufacturers have reported that the flour still performs quite well for baking, according to a Food Business News report. This could be encouraging as it may reduce the amount of vital wheat gluten that bakers need to incorporate into their recipes.
Furthermore, in the 21st century, there is a growing awareness of the nutritional importance of ingredients like calcium in food products. As such, manufacturers are increasingly focusing on the balance between cost and nutritional value, including the significance of calcium in their offerings. This trend is reflective of a broader movement towards healthier eating, which could influence consumer preferences even amidst fluctuating food prices.