Relief At the Grocery Store? Probably Not

Affordability has been a major focus of voters recently and there are early signs that there might be some relief on the way. Most price indices are based on futures market prices that are subject to high trading volatility, but looking over some available indices suggests there has been a setback in pricing, although lower food commodity costs could be offset by wholesale/retail food companies rebuilding their slim margins. In that scenario, prices may stabilize but not show a decline significant enough to be noticed by consumers.

First, the level of the CPI for Food shows the basis for concern among consumers. While the rate of increase of the CPI for Food has slowed from the 2021-22 surge, the index level has continued to creep higher, supporting the view of consumers that the prices for food items remain quite elevated, up 26.1% since January 2021.

While there is little sign of relief on the grocery store shelves yet, there are some modestly encouraging signs at the futures price levels. Of note (3rd chart below), however, despite an announcement of lower tariffs the price of coffee beans remains near record highs. Accordingly, as yet the price declines have been modest and while the upside pressure on retail food prices may abate, it does not appear that the decline in actively traded prices has been sufficient to bring down prices as noticed by the consuming public during the months ahead.