Grocery Store Prices Are Slashed Because Americans Are Eating Less Dairy And Meat

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Like a watched pot never boils, consumers may not notice when grocery store prices change. NPR reports that prices in America have been down for the longest period in around 60 years. Before you get too excited, we’re not primarily talking about organic foods, nut butters or your favorite Italian olive oil. We’re talking about beef, eggs and dairy.

Over the course of 2016 and into 2017, there were some significant price drops. According to the Bureau of Labor Statistics, retail food prices just went through 19 months of deflation. In 2016, egg prices declined 29 percent and meat prices decreased 4.7 percent over the year. Poultry prices also decreased 3.2 percent. It wasn’t until July of 2017 that we saw a slight rise of .3 percent in food prices.

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Last year, dairy farmers had to throw away 43 million gallons of extra milk, the highest amount of “spilled milk” in decades. According to the Wall Street Journal, “Market prices for milk have plunged 36 percent on average since prices hit records in 2014.”

Since Americans are collectively cutting back on beef, the decrease in prices makes sense. Since July, prices have started to go back up, according to the USDA, which calls grocery store or supermarket food “food-at-home.” The stronger the United States dollar is, the harder the sale of American food products overseas will be. If we have an excess of foods in the domestic market, prices could continue to drop.

According to NPR, economists are blaming the long period of deflation on the decrease of energy and transportation costs, which allow food producers to operate in a more economical way. This change can be translated into a “shift of supply and demand: People weren’t buying as much beef and eggs and farmers and ranchers weren’t producing.” This makes sense since people are becoming increasingly more health-conscious and in some cases are embracing vegetarian and vegan diets.

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The price wars among grocery stores today leave retailers constantly competing with each other to see who can offer the same products for a lower price. This is especially relevant when it comes to Whole Foods shoppers. Thanks to Amazon, Eater reports “prices on nearly a dozen staple ingredients, from avocados and kale to rotisserie chicken and organic butter, have gone down by as much as 43 percent in some areas.” As we move forward, it’s hard to predict what might happen with food retail prices because droughts or flood conditions could change it all in an instant with a lasting effect on produce and dairy.

What’s interesting is that while retail food prices have been deflated, restaurant prices have been on a constant month-to-month rise. Since the main costs of operating a restaurant consist of labor and rental fees, with a small amount going towards food, this long deflation in food prices hasn’t had a huge impact on restaurant menu prices.

We’ll see what the future has it store. Our diets have a bigger impact than we think on grocery store prices.