Food prices are on the rise again. What’s behind the increase

By Alicia Wallace, CNN

Rochester, Minnesota (CNN) — On the Sunday before Thanksgiving, a grocery store here was plumb out of eggs.

An hour and a half north in Richfield, some eggs could be had, but they weren’t cheap. That dozen cost $1.70 more — a good 40% higher — than it did just four months ago.

In November, egg prices shot up by 8.2% nationwide, logging one of the highest monthly spikes in the past two decades, according to Consumer Price Index data released last week. And it’s not just eggs — shoppers have seen jumps in beef, coffee and non-alcoholic beverages, driving up overall grocery prices to their largest monthly gain since January 2023.

And more increases appear to be coming down the pike for the pulped-paper-packed protein: Wholesale prices for chicken eggs soared by nearly 55% last month, and wholesale food prices rose by 3.1% (their highest monthly increase in two years).

Economists say not to panic. The “egg-flation” and sudden price hikes in some major food categories are reflections of isolated incidents rather than something systemic and indicative of a reacceleration of inflation.

That doesn’t make it any easier to stomach, however, for Americans worn down by years of prices rising much faster than they typically do.

But while seemingly outliers, these price increases add another layer of costs to products that have become significantly more expensive since before the pandemic.

“Overall grocery price inflation is relatively tame; it’s essentially in line with where it was before the pandemic … nothing alarming,” said Gregory Daco, EY Parthenon’s chief economist. “But prices relative to where they were before the pandemic remain very high.”

The once-in-a-generation bout of high inflation — although caused by a confluence of factors that emerged because of the pandemic, war in Ukraine and other events — weighed heavily on Americans and ultimately propelled former President Donald Trump back to the White House.

Dramatic increases in ‘pockets of the food aisles’

Even before “inflation” became a household word, food prices have long been subject to fluctuations as the result of weather events, crop yields, disease, war, supply chain snarls, spikes in demand or other temporary disruptions.

And that’s what’s happening here with eggs (and beef and coffee and orange juice).

“Inflation is what it is, but we’re seeing more dramatic increases in pockets of the food aisle, not necessarily overall,” said Billy Roberts, senior analyst for food and beverage at CoBank, a cooperative bank that serves agriculture businesses.

Eggs (+37.5% annually): A bird flu outbreak is ravaging flocks across the country, reducing the supply at a time when Americans are in festive moods and baking, cooking and dining out more.

The USDA in December further revised down US egg supply estimates and raised price forecasts for 2025.

Beef (+5% annually): US cattle inventory is at the lowest level in more than 70 years, according to the American Farm Bureau Federation. Driven by drought and other rising costs, the contraction is expected to continue through 2025 as dry conditions persist.

US beef cow herd expansion is not expected to start until 2026 or 2027, according to a CoBank report released last week.

Orange juice (frozen juices +17.2% annually; fresh juices 3.1% annually): Frozen non-carbonated juices tell the starkest tale for a beverage category that was walloped by hurricanes, bad weather and a citrus disease. And the future may be looking even bleaker for orange juice as Brazil — which supplies about 30% of America’s imported OJ — had its worst harvest in decades because of flooding, drought and citrus greening disease.

“I think these increases [in orange juice prices] are not necessarily going to be temporary,” CoBank’s Roberts said. “I think there’s going to be some supply issues underlying those price increases.”

Coffee (+1.9% annually): The same weather events that are hampering Brazil’s citrus production negatively impacted the second-most consumed beverage in the US. Arabica coffee beans, which make up the majority of global coffee bean production, sold for a record high of $3.44 per pound last week.

The future outlook, unfortunately, is cloudy for lovers of the morning cup o’ Joe.

“Climate change is getting worse. Just imagine more severe weather, rising temperatures and the direct effect to the people working in the coffee plantations,” Michael Hoffmann, professor emeritus at Cornell University’s College of Agriculture and Life Sciences, told CNN earlier this year. “Probably for (consumers), the coffee’s just going to get more expensive.”

Chocolate (wholesale chocolate manufacturing from cacao +108.7% annually): During the past three years, a series of adverse weather events has slammed the cocoa-producing regions of West Africa, responsible for over 70% of global cocoa supply. Candy-makers have responded by shrinking the size of the products, modifying recipes and leaning heavier into non-chocolate offerings.

“Cocoa costs, which could stay elevated into 2026, are stress-testing the confections industry on multiple levels,” Bank of America economists wrote in a note last week.

A perfect storm after a tempest

Although parts of the food industry are seeing cost increases because of specific reasons, those price spikes just hit differently these days — especially when they’re simultaneous.

Through November, grocery prices were up 1.6% from the year before, according to the latest CPI report. That annual rate is trending below overall inflation (which accelerated to 2.7% last month) and landed at an average seen during 2008-2019, Bureau of Labor Statistics data shows.

The annual rate of grocery price inflation is the highest since this time last year; however, it’s a far cry from 2022 when it averaged 11.4% and peaked at 13.5% — well above overall inflation’s peak of 9.1%.

That breakneck pace resulted in grocery prices being 27% higher now than they were in February 2020, before the onset of the pandemic in the US. And some categories had it far worse than others during that time span: Eggs are up 81% in the past four years, margarine is up 55%, beef and veal are up 37%; and juices are up 32%.

“That’s the difficult part — you’re unlikely to see food prices fall significantly and revert to 2019 levels,” Daco said. “The best one can hope for, generally speaking, is stabilization in prices.”

Trump last week said he hoped to bring down grocery prices by drilling for more oil domestically, which in turn could bring down gas prices and transportation costs.

Economists and food industry experts say it’s not that easy. Food manufacturers have expanded their footprint across the country to cut down on miles, and a lot of the increase in transportation costs has been because of driver shortages.

Separately, economists and businesses have sounded the alarm saying that other pledges from President-elect Trump — specifically, 25% tariffs against Mexico and Canada as well as mass deportations — could drive food prices higher and reaccelerate overall inflation.

$75 for a case of eggs: ‘I just kind of absorb it’

It’s next to impossible to avoid rising food prices, so consumers and businesses alike have been forced to adapt.

“I think we’ll continue to see that consumers are looking to stretch that food dollar any way they can, not just because of the price of food, but also because it seems like the price of everything is going up,” Roberts said.

Vidlak’s Brookside Cafe in Omaha, Nebraska, has served up breakfast and lunch for 28 years, but is getting squeezed by rising costs of the critical ingredients. Founder Roger Vidlak said he’s doing everything he can to not pass those costs along to customers.

“Recently, the eggs have been ridiculous,” Vidlak said, over the cacophony of sounds during a bustling Friday. “Six months ago, you could get a case of them for $18 to $20. For a 15-dozen case now, they’re up to $75.”

But he found some workarounds. In addition to staying on top of weekly price checks, Vidlak turned to cage-free eggs, which have been less impacted by the avian flu and are considerably cheaper — as are liquid egg mixes.

“I haven’t raised my prices for, oh, probably six months,” he said. “I just kind of absorb it.”

Every time prices go up, his business takes a hit, but he doesn’t want to have that negatively affect the folks on the other side of those plates of steaks and eggs.

“I’m a family-owned restaurant, so, I just kind of take it, because I’ve got hundreds of repeat customers, some of them in here every day,” he said. “You don’t want to gouge them.”

He added: “You want to make money, of course, but you don’t have to make it all in one day.”

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CNN’s Erika Tulfo contributed to this report.