The headline consumer price index (CPI) continues to coast back toward the target inflation range of 2%, but consumers are experiencing stronger inflation in their butter prices heading into the holiday season. So far, they have shown a willingness to pay for it.
Prices have fallen at the wholesale commodity level, lowering fat values and pulling Class IV prices below Class III, but it can take time for those lower spot price signals to reach retail shelves. Heading into 2025, Class IV will likely regain its premium once new cheese plants begin seeking out milk that otherwise might have been bound for Class IV plants.
After climbing more than 10% year-over-year for eight months in 2023, the overall food CPI has hovered slightly above a more palatable 2% for the past several months, as reported by the Bureau of Labor Statistics. But butter has bucked that trend and surpassed the overall food inflation rate, climbing more than 6% year-over-year on average since June and stretching to 7.8% in September.
Ben Laine
Nov. 11, 2024
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