Food prices are rising, according to the Wall Street Journal. “The cost of groceries in the U.S. increased 1.8% from a year earlier in December, rising at the fastest pace in more than a year, according to Labor Department data released last week. The cost of food overall was 0.3% higher in December, after increasing 0.4% in November,” wrote the Journal.
There are multiple factors at play: “Bird flu is killing chickens, cutting egg supplies and sending wholesale prices to a record; extreme heat and dry weather in the world’s coffee-growing regions have sent the cost of brews surging; and chocolate and cereal makers have raised prices for their products, too,” according to the Journal.
Grocery prices in December were roughly 28% higher than they were five years ago, according to the Labor Department.
“Some of the problems underlying food costs, such as disease and bad weather, don’t have quick policy fixes. Trump’s pledge to implement tariffs on goods from Canada, China and Mexico, some of America’s top trading partners, could further roil food-commodity markets,” wrote the Journal.
Eggs are one of the primary drivers of food inflation. The index for eggs was up 37% from a year ago, according to the latest Labor Department figures, and the average retail price of a dozen large eggs increased nearly 14% to $4.15 in December.
The price increase is fueled by the deadliest outbreak of avian flu on record, which first started spreading on U.S. farms in 2022. Egg price surges tend to be seasonal because wild birds—ducks and geese—migrate during the winter, carrying the virus to farms as they travel. To limit the virus’s spread, whole flocks are killed after an infection is confirmed.
Inflation has “cooled substantially since the middle of 2022, when it hit a four-decade high of more than 9%. More recently, however, progress has slowed, or even stopped outright: By some measures, inflation hardly improved in 2024,” reported the New York Times.
“When you step back and look at the overall state of inflation, we’re not really going anywhere,” said Sarah House, senior economist at Wells Fargo. “While there has been progress, the pace has been really disappointing.”
In the fall, NACS Daily reported that two segments have been leading grocery category-wide visit growth—“specialty and fresh format stores, which focus on produce, organic foods and culturally specific items (think Trader Joe’s, Sprouts Farmers Market and H Mart, to name a few), and value grocery chains like Aldi, WinCo Foods and Grocery Outlet Bargain Market.”
The specialty stores and value grocery chain segments offer markedly different shopping experiences, said Placer.ai. “Specialty chains tend to emphasize harder-to-find ingredients and fresh produce—sometimes even at higher price points than traditional grocery stores—while value grocery stores focus on affordability. But both categories are experiencing outsize visit growth in 2024, highlighting consumers’ dual interest in both quality and value.”