Grocery Executive sees smaller price increases on the horizon

photo via Pexels
photo via Pexels

FARGO (WDAY) - The President of Hornbacher’s grocery stores says food supply continues to improve following the pandemic, but higher prices are causing shoppers to be frugal.

Matt Leiseth, appearing on the Steve Hallstrom Show, says during the COVID pandemic, consumers had time to cook and weren’t eating out as often.  This brought them to grocery stores to take advantage of reasonable prices.  Inflation has changed those buying habits.  “Now we’ve seen some belt-tightening or people saying ‘that’s a splurge I’m not going to do today.’ So they’re still looking for protein items you put in the center of the plate, whether it’s chicken or a pork chop, but you’re probably not splurging on a steak.”

There may be some relief on the way.  Grocery prices rose 11.4% in 2022, but The USDA recently lowered its forecast of “grocery price inflation” for the fifth consecutive month. At the start of the year, the expected jump for 2023 was 8.6%. Economists now expect prices to only climb 4.9%, and just 0.9% in 2024.

Beef prices, however, are still stubbornly high.  “It’s still a matter of ranchers catching up and filling up the supply line again. There’s a steady stream of beef but it’s not the level we were used to pre-COVID.  The life cycle of cattle from calving to harvest, I’m told, is usually 5 years.  When COVID happened, the price got up so high that the ranchers took advantage of the higher price even with lower-weight cattle, so we’re still in that 3-year phase of bringing the herds back up to the level that we’re used to.”

Bread is another product that remains at elevated prices, says Leiseth, but there is good news in other parts of the grocery store.  The USDA says pork, egg, and dairy prices are expected to fall over the next year, while prices for fruits and vegetables should remain relatively unchanged.

“Egg prices are back down to where historically they’ve been with advertised prices around $1.00 or $1.25 (a dozen), and unlike cattle; bringing chickens back in to laying hens is a much shorter life cycle. So we’re starting to see that nice rebound.”