(NEW YORK) — Customers at the bakery Nothing Bundt Cake, in Memphis, Tennessee, choose items from snickerdoodle, red velvet and blueberry bliss, among other flavors. But patrons cannot avoid the surging prices.
Amy Lupo, who runs three Memphis-area company franchises, said a jump in the cost of ingredients over the past year has caused her to hike the price of an individual-sized cake from $4.50 to $5.25, a staggering 16% increase.
“It’s a tough choice to raise prices,” Lupo told ABC News. “Our customers, for the most part, have been understanding because people go to the grocery store and see it everywhere.”
Lupo is hardly the only baker lifting prices. The cost of baked goods has jumped 14% over the last year — a rate nearly double the pace of food inflation and triple the rate of overall price hikes, government data shows.
The soaring prices stem from supply shortages imposed by the Russia-Ukraine war and lower-than-expected crop yields, experts said, noting that resilient consumer demand in the face of high prices has exacerbated the problem.
“If all the stars could align in a bad way — it happened,” Naomi Blohm, a senior market advisor for Total Farm Marketing, told ABC News.
Consumer prices overall rose 5% in March compared to a year ago, extending a months-long slowdown of price increases, government data showed.
Bakery items and ingredients, however, have defied the slowdown. The price of margarine has jumped 33% over the past year, while the cost of flour has leapt 17%. Cookie prices are up 16% and bread costs have spiked 13%, the data said.
An avian flu outbreak, meanwhile, has sent egg prices up 36% over the past year.
In recent years, a weak yield of crops like wheat, soybeans and corn snarled the global supply, leaving the food system vulnerable last February when Russia invaded Ukraine, the world’s fifth-largest exporter of wheat, Blohm said.
“We have not had an abundant crop here in the U.S. and around the world,” Blohm said. “Then the Ukraine-Russia war just ignited the wheat price.”
The price of wheat rose to as much as $11 per bushel last June, far higher than the typical cost of between $5 and $6 per bushel, elevating prices throughout the baked goods supply chain, Blohm added.
“When you’re feeding a dairy cow high-priced grain, milk prices go higher and butter prices go higher,” Blohm said.
Rather than scoff at high prices for baked goods and ingredients, U.S. consumers have borne them, drawing on savings accumulated during the pandemic when hundreds of millions received stimulus checks but were stuck at home with little to buy, David Ortega, a food economist at Michigan State University, told ABC News.
The resilient consumer demand, as well as uncertainty about the duration of the Russia-Ukraine war and the avian flu outbreak, have left food price hikes “very sticky,” Ortega told ABC News.
“Food prices tend to rise up very quickly but take much longer to come down,” he said.
Price increases for baked goods and ingredients will likely remain high this year, since the time it takes for production and distribution means that consumers are currently encountering the results of previous disruption, Blohm said.
However, the prices could cool at the outset of next year if Ukraine and Russia agree to allow grain from the region to reach the global market, she said, emphasizing the added importance of strong global crop yields this summer.
“We need cooperation from Mother Nature,” Blohm said.
The easing of costs would be welcome news for Lupo, of Nothing Bundt Cake, who said she wants to pass along the potential savings to customers.
“I would love to be able to roll back prices,” she said. “That would certainly be my hope.”
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