Inflation Challenges Affecting Retail Prices of Beef

Livestock economists at Texas A&M AgriLife Extension Service say retail prices for beef are lower than they were a year ago, but inflation challenges are weighing on the U.S. economy as a whole, and cattle numbers are expected to decline heading into 2023. Prices remain historically high as expected.

“The total consumer price index is 7.1% higher than last year, but the retail price of beef is lower than it was a year ago,” says David Anderson, also a professor of agricultural economics in Texas A&M University’s School of Agricultural Life. says Mr. Science. “[Beef retail prices]have been cheaper in recent months, and they are lower than they were last month. But the price level remains high compared to previous decades.”

Anderson said there are signs that consumers are looking at alternative beef cuts as a cost-cutting measure in the retail meat case.

“I think there is evidence that consumers are switching to cheaper products,” he said. “For example, buy fewer ribeye cuts and buy less expensive steaks and ground beef. Overall, demand for beef remains good and people continue to buy it. That’s one of the reasons why retail prices have remained high ever since: the impact of rising costs across the economy and rising interest rates is affecting people’s budgets, making people buy less of all kinds of goods. and lower inflation.”

Despite the higher price, prime rib will continue to hit many tables this holiday season, Anderson said.

“Prime rib, standing rib roast makes a great celebration/holiday dinner,” he said.

record beef production

As 2022 draws to a close, beef production across the United States is at a record pace as much of the country is in drought conditions.

“We are on pace to produce a record amount of beef, over 28 billion pounds this year,” he said. “Droughts have increased production, and higher production costs have forced ranchers to cull their herds. The increase has boosted beef production for now. Production is high now, but the impact of fewer cows and calves is being felt, so beef production will drop significantly in the future. will.”

Meanwhile, wholesale beef prices are well below what they were a year ago. Declining wholesale prices are leading to falling retail prices very slowly, Anderson said.

“These lower prices should start showing up in grocery stores,” he said. “Beef is actually relatively cheaper than pork and chicken because the price of beef has fallen in recent months.”

Wholesale chicken prices have fallen dramatically in recent weeks and months due to increased production, Anderson said.

“In the consumer price index, retail prices for both pork and chicken fell from the previous month, but were well ahead of last year,” he said.

Fewer cows projected in 2023

Anderson said the overall U.S. herd is down 3% from a year ago.

“We are moving towards fewer cattle in the United States,” he said. We are heading towards a tightening in production, and biologically speaking, beef production will tighten until at least 2025. Rebuilding the herd will require a recovery from the drought and the need for farmers to recoup some profits. You will need a price/cost.”