By Howard Schneider
WASHINGTON (Reuters) - With gas prices and airfares falling it will be cheaper for Americans to get to Grandma's or wherever they celebrate Thanksgiving this year, and when they arrive they'll find another happy price shock: The turkey and sides will cost less than last year.
The American Farm Bureau Federation's annual survey of holiday food prices out Wednesday shows the full spread will run a party of 10 about 4.5% less in 2023 than in 2022.
The bureau annually gets a nationwide group of shoppers to price 11 ingredients needed for the traditional meal of turkey, stuffing, sweet potatoes, rolls, peas, cranberry sauce and pumpkin pie, a menu that might trigger mealtime dissent about the peas but, this year at least, not about the cost. Seven of the 11 ingredients saw price declines over the year, including the centerpiece poultry down 5.6%, to $27.35 for a 16-pound bird, as of the first week of November compared to the year before.
Shoppers "will see some relief in food prices for their Thanksgiving dinner," farm bureau economist Betty Resnick wrote of this year's survey results, though she noted that the $61.17 total bill for the meal was still about 25% above where it was in 2019, before the COVID-19 pandemic.
Her analysis, in fact, and the evolution of the farm bureau's Thanksgiving meal prices are a micro-version of the larger pandemic inflation story that households, elected officials and the Federal Reserve have been grappling with.
The bad news: The pandemic's impact on what economists refer to as the "price level" has been demonstrable, an across-the-board shift higher that is unlikely to reverse. The farm bureau's data showed the cost of the annual meal stayed in a narrow range from $48.96 to $50.11 from 2011 to 2019, a period of steady but largely sluggish U.S. economic growth but also low inflation with prices held down by a combination of global, technological and other factors.
After falling to $46.90 in 2020, a year when economic outcomes, travel, and group activities, remained highly distorted by the health crisis, the price spiked to $53.31 in 2021 and set a record $64.05 in 2022 as garbled supply chains led to shortages of things like whipping cream, and an avian disease outbreak crimped turkey supply.
The good news: The pace of change may remain slow going forward, with supply problems now largely sorted out and recent producer price data pointing to modest food inflation ahead.
The Thanksgiving holiday is also the traditional kickoff of the Christmas shopping season, a key season for retailers that could see particularly aggressive discounting at a time when consumer demand and economic growth may be ebbing -- a dynamic already developing in falling producer profit margins.
Among the goods with the biggest price declines, the cost of fresh cranberries is down 18% over last year, "indicative of expanded supply," Resnick wrote, as well as a 33% jump in imports. The 22% drop in the price of whipping cream may be retracing last year's 26% shortage-driven spike, with prices "back in line with the status quo of previous years," she said.
The goods in the Thanksgiving hamper were not all immune from price hikes, she said, with some of the more processed items like canned pumpkin mix (up 3.8%) and dinner rolls (up 3%) possibly "impacted by sustained increases in wages due to a tight labor market."
But the sort of level jump seen in the last years, with the overall consumer price index 18% higher as of October 2023 than it was in the same month three years before, may, if the Federal Reserve is true to its mission, be a thing of the past.
Overall prices did not increase at all from September to October; retail sales over the month fell in a further sign that the rapid consumer spending of the pandemic, a factor in inflation, may have exhausted itself; average gas prices are about 8% lower than last year according to AAA data; and the price index for airfares in October was more than 20% below its pandemic peak and lower than where it was before the COVID-19 outbreak.
There may even be more bargains waiting.
According to the farm bureau turkey prices are likely headed even lower after their survey.
"Consumers who have not yet purchased a turkey may find additional savings in the days leading up to Thanksgiving," the organization said in a news release.
One Thanksgiving cost not covered by the Farm Bureau survey is not going down, however: The cost to watch all those football games on the video service of your choice is about 5% pricier this year, Labor Department data shows.