Food Prices Are Lowering, But That Doesn't Mean Corporations Will Play Along
In the past two years, the United States has been hit with a wave of inflation that's taken a toll on almost every American's wallet. Beyond that, housing costs and gas prices climbed to out-of-control numbers, though the grocery store might be where we've felt it most.
By the end of 2022, the cost of a dozen eggs had jumped almost 50% from the start of the year. Chicken and beef prices had also climbed substantially, and "shrinkflation" practically became the word of the year.
Now, though, it looks like food costs are finally starting to slow. Prices remain high, but the surge in production and ingredients costs seems to have ended, at least for now. While the cost of producing food has dropped, the prices on supermarket shelves have continued to increase — potentially because the corporations that produce these items are taking advantage of Americans' willingness to pay higher prices.
Food prices could continue to climb if corporations don't cooperate
There are a few factors at play in terms of why prices are so high. Transportation costs are still up (as is gas), and labor costs are higher than usual, too. However, now that producers have raised prices and Americans have mostly continued paying those prices, it's allowed these producers to get away with charging more than they need to for their items. "Companies view these as occasional opportunities, and they don't want to miss out," Jean-Pierre Dubé, a marketing professor at the University of Chicago's Booth School of Business, told CNN.
Now, though, it's created a slippery slope. Food prices continue to put a strain on Americans' wallets, but with almost all major food companies playing the same game, Americans have little choice but to continue purchasing the foods they always have — at a higher cost. This keeps companies from seeing any reason to lower them.
So, are prices expected to drop at all? In short, no. The USDA released a report on food price increases, and prices are still expected to climb in 2023. Though they should climb slower than they did the previous year, lower food production costs won't have companies changing their retail prices any time soon — unless it's in the wrong direction.