CPI read: Food prices outpace general inflation due to beef and coffee pressures

[Close-up View Of Organised Pantry Items With Variety of Nonperishable Food Staples And Preserved Foods in Jars On Kitchen Shelf]
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The Consumer Price Index report for December indicated a 2.6% year-over-year increase for the core rate, which fell slightly below the expectation of economists and was level with the pace seen in November.

The closely watched food category was up 3.1% year-over-year in December, with food away from home up 4.1% Y/Y during the month and food at home up 2.4% Y/Y.

The food category with the biggest jump in prices compared to a year ago was once again beef. Uncooked ground beef (+15.5%), uncooked beef roasts (+17.5%), and uncooked beef steaks (17.8%) all showed elevated prices. The overall meats category was up 9.2% in December.

Beef prices in the U.S. are currently near record levels due to a combination of supply shortages driven by long-term droughts, high feed costs, reduced cattle inventories, and strong consumer demand for beef. Notably, the national cattle herd is at its lowest level in decades after severe droughts over the last five years forced ranchers to reduce breeding herds as grazing lands and feed became scarce. The replenishment cycle is expected to take several years. In addition, analysts note that tariffs on imports and trade disruptions have limited foreign supply, which has also contributed to higher beef prices in the U.S.

A broad list of companies impacted by beef prices includes JBS N.V. (JBS [https://seekingalpha.com/symbol/JBS]), Kroger (KR [https://seekingalpha.com/symbol/KR]), Albertsons (ACI [https://seekingalpha.com/symbol/ACI]), Walmart (WMT [https://seekingalpha.com/symbol/WMT]), Tyson Foods (TSN [https://seekingalpha.com/symbol/TSN]), Hormel (HRL [https://seekingalpha.com/symbol/HRL]), Pilgrim's Pride (PPC [https://seekingalpha.com/symbol/PPC]), Kraft Heinz (KHC [https://seekingalpha.com/symbol/KHC]), Domino's Pizza (DPZ [https://seekingalpha.com/symbol/DPZ]), Texas Roadhouse (TXRH [https://seekingalpha.com/symbol/TXRH]), Shake Shack (SHAK [https://seekingalpha.com/symbol/SHAK]), McDonald's (MCD [https://seekingalpha.com/symbol/MCD]), Wendy's (WEN [https://seekingalpha.com/symbol/WEN]), Restaurant Brands International (QSR [https://seekingalpha.com/symbol/QSR]), and Beyond Meat (BYND [https://seekingalpha.com/symbol/BYND]).

Coffee prices also showed a big jump, up 19.8% from a year ago in December. There was tariff relief for the sector in November, but it is unclear when prices will fall at the retail level. Companies potentially impacted by the level of coffee prices include Starbucks Corporation (SBUX [https://seekingalpha.com/symbol/SBUX]), Dutch Bros (BROS [https://seekingalpha.com/symbol/BROS]), First Watch Restaurant Group (FWRG [https://seekingalpha.com/symbol/FWRG]), Coffee Holding (JVA [https://seekingalpha.com/symbol/JVA]), Dunkin' Brands, J.M. Smucker (SJM [https://seekingalpha.com/symbol/SJM]), Starbucks (SBUX [https://seekingalpha.com/symbol/SBUX]), Black Rock Coffee Bar (BRCB [https://seekingalpha.com/symbol/BRCB]), McDonald's (MCD [https://seekingalpha.com/symbol/MCD]), Costa Coffee (KO [https://seekingalpha.com/symbol/KO]), Tim Hortons (QSR [https://seekingalpha.com/symbol/QSR]), Luckin Coffee (LKNCY [https://seekingalpha.com/symbol/LKNCY]), Nestle (NSRGY [https://seekingalpha.com/symbol/NSRGY]), Keurig Dr Pepper (KDP [https://seekingalpha.com/symbol/KDP]), Kraft Heinz (KHC [https://seekingalpha.com/symbol/KHC]), and Krispy Kreme (DNUT [https://seekingalpha.com/symbol/DNUT]).

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