Food Prices Are Not Going To Decrease
Your purchasing power returns through increasing wages, not decreasing prices.

In this election season, reporters insist on asking politicians what they plan to do to bring down food prices.
I’m still waiting for someone to give the right answer: food prices are not going to decrease.
Don’t get me wrong. The prices of some foods will decrease. Food is subject to the forces of supply and demand just like other products, but the number at the bottom of your grocery store receipt will drift upwards over time.
Consider bread. The main ingredient in bread is flour, which is made from wheat. The price of wheat fluctuates wildly, as shown below. It is currently 8c/lb, down 60% from its peak of 20c following Russia’s invasion Ukraine. These fluctuations obscure the fact that the long run trend is up.
Wheat is the main ingredient in bread, but it makes up only 5-10% of the price of bread. This means wild fluctuations in the price of wheat have little effect on bread prices. The price of white bread is up 46% since January 2020; it is up 23% since May 2022 when the wheat price peaked.
Most of the price of bread stems from manufacturing, packaging, distribution, and marketing costs. Bread prices have continued increasing because the prices of all those things have continued increasing. The more processed is a product, the more it will follow the general upward trend of prices in the economy and the less it will be affected by raw commodity prices.
The graph below shows grocery prices as measured by the consumer price index for food at home alongside the consumer price index for all items. Both have increased by 85% since the year 2000. If you’re skeptical of these government numbers, read this article in which I validated the numbers based on my own receipts.
In a healthy economy, the prices of individual products go up and down, but the general price level only goes up. Overall, food prices follow the same trends as general prices. The price level in an economy only decreases when demand dries up and it falls into a deep recession.
During and after bouts of high inflation like we have experienced recently, wages will increase to catch up with prices. Wages are already increasing in the US, especially for low-income workers, whose wages have increased by more than the rate of inflation on average.
Your purchasing power returns through increasing wages, not decreasing prices.
I made the graphs in this article using this R code.
Addendum: Ag Data News was on hiatus for the summer in part because I was changing jobs. I am now a professor in the Department of Agricultural and Resource Economics at UC Berkeley, where I hold the Gordon Rausser Distinguished Chair. I was at UC Davis for 23 years and it’s weird to no longer be there, but I am excited for this new opportunity. I’m looking forward to continuing Ag Data News among many other projects.