Purdue ag economist: Holiday food prices down this year

WEST LAFAYETTE, Ind. - Consumers will pay less for food prepared at home this holiday season, with overall prices down about 2.3 percent from last year, says Ken Foster, department head and professor of agricultural economics at Purdue University.

Leading the decline are animal products such as meats, poultry, and eggs. Prices in that category are down 6 percent. Dairy products such as milk, yogurt, cheese and ice cream are down 2 percent. Grain-related food categories - including vegetable oils, cereals, bakery products and sweeteners - are down 1 to 2 percent. Fruits and vegetables have dropped 1 percent.

Prices for “food-at-home” items have declined for 11 consecutive months, the longest such stretch since 1959-60.

“The most important reason for lower grocery store prices are lower farm prices,” Foster said. “Abundant harvests over the past three years have reduced the prices farmers receive. Lower prices for feed items like corn and soybean meal have increased animal production and lowered animal product prices from beef to milk. Food consumers are the benefactors this year. Record U.S. yields for corn, soybeans and wheat in 2016 will keep grocery store food price increases at modest levels into 2017.”

Most of the traditional meal items will costs less this year, he added.

“With retail beef and pork prices down 7 and 5 percent from a year ago - even more than poultry prices, which are down 1.5 percent - it is highly likely that turkey prices will be lower than a year ago for the holidays,” he said. “Turkeys are frequent loss leaders at holiday time to get shoppers into the store and any pressure to raise turkey prices will shift shoppers to other meats with their low prices.”

The 2016 cranberry crop appears to be virtually unchanged from 2015, Foster said, but weather took a toll on U.S. pumpkin and sweet potato yields this year.

“In both North Carolina and Louisiana, flooding events lowered production of sweet potatoes,” he said. “Hurricane Matthew struck North Carolina, the nation’s leading sweet potato producing state, in the middle of harvest season with only about half of the crop collected. Louisiana suffered widespread flooding during the sweet potato growing season as well as periods of excessively dry weather, leading to yield loss up to 50 percent or more on some farms.”

Pumpkin production was also limited this year by high rainfall in Illinois, the country’s leading pumpkin-producing state, where processors anticipated canning 50 percent less this year compared with past years. Producers there anticipated having sufficient canned pumpkin to get consumers through the holiday season but expected supplies to run short before next year.

“If you just have to spend more this year, then perhaps you can turn to the local, organic, or sustainable suppliers for this year’s holiday meals,” Foster said. “Prices for the same items in those markets continue to be strong and in the case of turkey, they may be hard to find. Bargain shoppers may find opportunities in diversifying into other meats such as pork and beef, but there is likely no substitute this year for pumpkin pie with prices running higher than last year.”

Driving to a holiday destination should also cost less this year, Foster said.

“If you are making a trip to celebrate the season with family, then it’s good to know that the national average price of regular gas is $2.16 per gallon, a fraction of a cent lower than this time last year,” he said. “So whether you are staying home or hitting the road, have a happy and safe holiday.” 

Sources: Ken Foster, 765-494-4191, kfoster@purdue.edu

Chris Hurt, 765-494-4273, hurtc@purdue.edu

Agricultural Communications: (765) 494-8415;
Darrin Pack, dpack@purdue.edu 
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