When will California food prices fall? The answer is tricky
Elk Grove couple Susan Boyd and Paul Kronenberg live on a fixed income and shop at four different supermarkets to keep their grocery bill affordable. Yet, even with an arsenal of cost saving measures, there are some foods they just can no longer buy.
Grocery store prices, according to the federal Bureau of Labor Statistics, have soared 13% over the past year. The economic consensus is food prices will likely ease next year, but there’s little agreement on precisely when that will be obvious to consumers.
Here’s why: Food prices tend to change because of the cost of labor, energy and commodities. One key to food prices’ future involves the 8.2% increase of the overall rate of inflation over the past year.
“My best guess is food prices will increase about the same as the rest of the prices in the economy,” said Aaron Smith, professor of agricultural economics at the University of California Davis.
But, he warned, “I’m not confident predicting food prices will go down quickly.” The UCLA Anderson forecast predicted consumer prices in California will go up an average of 4.9% next year. And while the Federal Reserve is determined to reduce the rate of inflation, there are no guarantees.
In the meantime, retirees Boyd, 68, and Kronenberg, 73, spend on average $150 a week or $600 a month on groceries. They separate their grocery list between Raley’s, Winco, Walmart and Costco, plus track the prices of their staple foods and buy in bulk.
“It is stressful,” Boyd said during a phone interview with The Bee while riding shotgun with her husband on the way back from a more than $100 Raley’s grocery trip. “And every time you walk out you wonder how much of this you’ve just been ripped off for.”
Food saving tips from your neighbors
It’s not a secret that cooking from scratch is generally less expensive than eating out. Kronenberg said while he knows some people don’t have the time to do so, cooking at home “really helps reduce costs.”
Here are a couple of other grocery shopping tips and food-saving hacks that have helped Boyd and Kronenberg manage their Sacramento grocery bill during the latest inflation spell:
1. Grocery shop with a list
2. Buy in bulk
3. Decide which brands you don’t mind substituting for something else
4. Track the prices of staple products at different supermarkets
5. Portion your groceries
6. Eat the leftovers
7. Pack a lunch for work
Even with thoughtfully curated shopping habits, the fact is there’s no escaping high food costs.
Economists predict future food prices
Joseph Glauber, senior research fellow at the International Food Policy Research Institute, saw agricultural commodity prices probably remaining high throughout next year.
The war in Ukraine has meant tighter grain supplies, and “the war continues with a threat of further escalation so it may take even longer before the Black Sea trade gets back to more normal flows,” he said.
While prices of many commodities and energy have gone up, that’s a small part of the overall cost at the grocery store.
Sung Won Sohn, president of SS Economics in Los Angeles, estimated labor accounts for about two-thirds of total retail food costs.
“In the current situation, labor costs are on an upward path and not likely to slow its ascent anytime soon,” Sohn said. “Energy and agricultural commodity prices are volatile and can provide temporary respite to food inflation, but eventually labor costs dominate the trend.”
Smith cited the “self-reinforcing cycle” that drives inflation. First prices go up. Then employees want higher wages to pay for the increase. As wages go up, prices stay up. And so on.
The most optimistic forecast comes from the U.S. Department of Agriculture.
“Food prices are expected to grow more slowly in 2023 than in 2022,” said the department’s Economic Research Service.
Next year, it saw increases of 2% to 3%. It provided no specific reason for the change, and efforts to reach a department economist were unsuccessful.
Don’t look for a break at the grocery store any time soon.
This story was originally published October 20, 2022 at 8:22 AM with the headline "When will California food prices fall? The answer is tricky."
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