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Food inflation to ease in 2024Food inflation to ease in 2024

Consumers may find respite from pricey groceries as ag commodity costs calm down.


November 15, 2023

1 Min Read
Grocery cart
Angel Garcia/Bloomberg

By Celia Bergin

Consumers may find some respite from pricey groceries next year as lower agricultural commodity costs cool food inflation, according to Rabobank.

Costs should ease for some products as prices of sugar, coffee, corn and soybeans fall amid better supply prospects, the bank said in a report Wednesday. Demand is also set to remain weak with shoppers still squeezed by the cost-of-living crisis.

Food-commodity prices are calming after a few years of being roiled by the Covid pandemic, extreme weather and Russia’s invasion of Ukraine. A United Nations gauge of global costs has slid about 25% since hitting a record in March 2022, helping to lower broader inflation. But it takes time for those costs to filter through to supermarkets, which have faced high energy and labor expenses.

“Producers are still grappling with the after-effects of war, adverse weather, high farm input inflation and weak consumer demand, but eying 2024 as the return to a semblance of normality,” Rabobank analyst Carlos Mera said. “It won’t be plain sailing but the more positive outlook for the majority of agri commodities should lead to relief for buyers.”

Still, the outlook remains uncertain for some commodities such as wheat. As well as weather threats, the grain may face potential restrictions on Russian exports, according to Rabobank. And while Ukraine will continue to ship supplies it will have a smaller exportable surplus in the next few years, it said.

For the 2023-24 season, Rabobank projects bigger stockpiles for corn and wheat than the US Department of Agriculture’s latest forecasts published last week. 

© 2023 Bloomberg L.P.

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