Wheat, Sugar, Coffee & Meat: How Rising Commodity Prices Are Impacting Holiday Grocery Shopping

Millions of Americans are bracing for higher food prices this holiday season as inflation continues to drive up grocery bills around the country.

The Wall Street Journal reported on Monday that prices for certain products, including rib-eye, are up about 40% from a year ago, forcing holiday shoppers to reconsider their purchases. Rising labor, materials and transportation costs, as well as supply chain disruptions, have forced companies like MONDELEZ INTERNATIONAL INC MDLZ and Kraft Heinz Co KHC to raise prices on a number of products.

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The Numbers: Commodity prices have been soaring, giving food retailers little choice but to raise prices. Wheat prices are up 28.6% from a year ago. Coffee prices are up 87.7%. Sugar prices are up 33.9%.

The U.S. Bureau of Labor Statistics reported a 4.5% rise in overall food prices in September, led by a 10.5% increase in meat, poultry, fish and egg prices. Poultry prices are up 6.5%, while beef and veal prices are up 17.6%.

As a result, shoppers appear to be passing up on name brand products in favor of store-branded products. Store branded chicken products gained 2.7% market share and store branded frozen meat products gained 2.5% market share over name brand alternatives in the week ending Oct. 20, according to IRI.

Pricing Study: Some shoppers may even be opting to buy less this holiday season. Bank of America credit card data for the week ending Oct. 30 suggests total grocery spend was down 2.2% from a year ago, but up 8.4% compared to 2019.

A recent Bank of America study of 10 U.S. food retailers found Lidl and Aldi raised prices the most over the past two years at 11% and 9%, respectively. Conversely, Dollar Tree, Inc. DLTR subsidiary Family Dollar was the only retailer to have lower prices today (-2%) than in 2019, while Walmart Inc WMT prices are up just 1% in that time.

Benzinga’s Take: Overall grocery prices at Walmart haven’t changed much in the last two years, but meat prices are experiencing more inflationary pressures than other food categories. The good news for employed Americans dealing with rising food prices is that the Labor Department just reported U.S. wage growth accelerated from 4.6% in September to 4.9% in October.