How Inflation Levels Could Affect Food Prices in 2024

Over the past four years, rising food and fuel prices have caused a global cost-of-living crisis that affects how consumers shop. With tighter budgets for everyday essentials and hardly any room for luxuries, many people are growing weary. However, we may be approaching the light. Economists worldwide predict that inflation may ease over the coming months.
Escaping a Period of Record-High Inflation Rates
The Consumer Price Index (CPI) tracks inflation by recording changes in the average price of a basket of typical consumer goods. Between 2021 and 2022, the CPI for groceries rose by 11.4%–the highest annual price increase since the 1980s. The elevated cost of food put pressure on many households to reduce unnecessary spending.
The after-effects of COVID-19 and the conflict in Ukraine were the perfect storm. Supply chains were under immense strain as economies reopened for business while energy prices soared due to unstable markets in Europe and the Middle East. Higher prices in manufacturing and logistics eventually found their way to the consumer, forcing people to buy less for more.
Will Food Prices Fall in 2024?
The FAO’s Food Price Index shows that global food prices are falling. In October 2023, groceries were 10.9% more affordable on average than in October 2022. This downward trend will likely continue into 2024 as US inflation decelerates to its 2% yearly target. However, it’s necessary to understand the difference between deceleration and decline.
Inflation is largely unavoidable; therefore, it must increase slightly every year. That means food prices will continue to rise, albeit not as rapidly as in 2021 and 2022. While this is good news for consumers, they will still pay more for food overall than they were pre-pandemic.
Consumer Grocery Shopping Trends to Watch
The best way for manufacturers and retailers to get ahead during difficult economic times is to cater to people’s spending behaviors. Here are two consumer shopping trends that will prevail into 2024, according to market research from NielsenIQ.

  1. Calculated Spending
    Many consumers believe keeping a strict budget is the best way to navigate the cost-of-living crisis. NIQ’s global study found that 43% of households plan to spend less on dining out, replacing it with more affordable home-cooked meals. Additionally, 32% of respondents said they cut costs by excluding non-essential items.
    While there may be room for some luxury purchases in 2024, consumers will generally make them few and far between. Brands should offer their customers real value rather than appeal to impulse buying.

  3. Buying Store Brands
    Private-label products are becoming an increasingly attractive option to cash-strapped consumers. Sales in this sector skyrocketed during 2022 and 2023, and NIQ predicts it could gain up to 25% market share over the next decade.
    In the firm’s recent survey, 35% of respondents said that some store brands offer higher or equal quality than name-brand products. This finding shows how consumer sentiment towards private-label groceries is changing. In 2024, manufacturers may find value in partnering with retailers to produce high-quality store-brand products.

Using Flavor Additives to Manage Production Costs
As consumers prioritize affordability, food and beverage manufacturers must follow the trend. Using natural or synthetic flavorings rather than whole ingredients in packaged and processed foods may be the key to maintaining lower prices. However, one must ensure ingredient quality and traceability to satisfy today’s discerning shopper.
Advanced Biotech offers an extensive range of food and beverage flavorings and aromatics. Explore our natural extracts, essential oils, distillates, and more, or contact us to find the perfect ingredients for your product.