Sugar, spice, and everything overpriced — these were the ingredients chosen to create the perfect inflation storm. In recent years, food prices have risen faster than the speed of your DoorDash delivery (even with a hefty tip), but one of the world’s largest agricultural banks is forecasting that 2024 will taste a little sweeter.

Rabobank predicts that high food inflation will finally ease as the effects from “war, adverse weather, high farm input inflation and weak consumer demand” taper off — and production returns to normal (BBG).

The result? Less sticker shock when you pick up your Trader Joe’s Pickle Popcorn next year. 2022 US food prices rose nearly 10%, but by October 2023, prices were up just 3.3% YoY. It all depends on where you source your food from… 

Home chef relief: The price of food away from home (i.e., restaurants, bars, etc.) rose 2.5x faster than the rate of grocery prices in October. And companies are blaming worker shortages and labor costs:

• 19 states and localities increased their minimum wages this past summer — while California recently signed off on a 29% minimum wage increase for fast-food workers next April.
• While some companies like Chipotle (NYSE:CMG) are responding by raising prices slowly, others, like McDonald’s (NYSE:MCD) are forecasting a 10% price hike by the year’s end. 

International food fight

According to the UN, more than 735M people faced hunger in 2022 — a 20% rise from 2019. The increase mostly came from emerging economies  facing a “double burden” from growing import and currency costs. While prices are expected to decline, some factors could derail those plans: 

• Rabobank’s head of agriculture cautioned that ongoing wars’ “disruptive” effects could impact the market. Wheat, a staple for emerging markets, is expected to be “volatile” for a fifth year as a result of the Ukraine-Russian conflict (FT).
• “Adverse weather” could also disrupt agriculture in countries like Argentina and Australia — leaving them more dependent on Russia, which has been sanctioned by most of the industrial world (FT).

America is largely protected from many global shortages due to its reliance on Mexico, Canada and domestic production — but US government officials are cautiously eying food insecurity as lingering political tensions risk sparking another food shortage.