Sorry Holiday Bakers But the Latest Inflation Report Has Bad News for You

The price of baking ingredients has increased just in time for the holidays.
Updated June 6, 2024
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The monthly release of the Consumer Price Index (CPI) provides a snapshot of economic trends that affect our daily lives. The November 2023 report brings forth a mixed bag of results, with an increase in the prices of essential baking ingredients just in time for the holiday season but an overall tepid increase in inflation of just .1%.

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Inflation was pretty flat in November

The CPI report highlights a nuanced economic landscape where specific sectors experience pronounced shifts. In November, the food index increased by 0.2%, a modest uptick from October's 0.3% rise. However, the devil lies in the details. The index for food at home, encompassing groceries and certain essential baking items, saw a 0.1% increase, which is basically flat.

Delving into the specifics, the index for cereals and bakery products, integral to holiday baking, rose by 0.5% in November, compounding the 0.2% increase in October. The fruits and vegetables index, impacting recipes and decorations alike, increased by 0.3%, while nonalcoholic beverages registered a 0.5% surge.

However, one of the more important figures comes with the meats, poultry, fish, and eggs index, which saw a 0.2% decrease in November. This decline, especially in eggs, a staple for holiday baking, hints at potential disruptions in the supply chain or feed cost fluctuations.

Comparing this surge in baking essentials to the overall inflation rate of 0.1% sheds light on the disproportionate impact on these items. While the overall inflation rate appears modest, the essential ingredients for holiday baking have experienced a significant hike, potentially straining households' budgets in preparing for festive occasions.

Baking essentials cost more as the holidays near

As we approach the holiday season, the price surge for baking essentials can pose challenges for families and individuals looking to indulge in festive culinary traditions. Eggs (over the last 12 months) and butter, crucial components of holiday baking, have witnessed notable increases. 

The price of eggs increased by 2.2% in November while butter increased a whopping 4.3%. Both are a significant increase over the overall inflation growth of 0.1% for the month.

Eggs, a versatile ingredient in baking, have declined availability, impacting prices and potentially limiting the quantity households can afford. Butter, another holiday staple, is not explicitly mentioned in the report but is likely affected by the broader trends in food prices.

This inflationary pressure on baking essentials comes when many families are gearing up for holiday celebrations. From cookies and cakes to festive dinners, the increased costs of key ingredients may force households to reconsider or scale back their holiday baking plans, making it as important as ever to beat grocery inflation for the season.

At least gas prices are declining

Amid the challenges of escalating costs of holiday baking, there's a silver lining in the CPI report — gas prices have seen their best prices since January of 2022. The energy index, which fell by 2.3% in November, contributed to the overall moderation of inflation. The gasoline index, in particular, decreased by 6.0%, marking a significant drop.

For consumers planning holiday travel or commuting to festive gatherings, the gas price reduction brings relief. The extra savings at the pump could potentially offset the increased expenses in holiday baking essentials, providing a financial breather for households during the season of giving.

Bottom line

As we digest the insights from the November 2023 CPI report, it's evident that the economic landscape, while diverse, holds specific challenges for holiday bakers. The surge in prices for essential baking ingredients like eggs and potentially butter adds an unexpected twist to holiday preparations.

While the increased costs may require some adjustments in holiday baking plans, the decline in gas prices brings relief, offering a silver lining amid economic uncertainties. As households work through these economic fluctuations, the spirit of the season remains resilient.

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Author Details

Georgina Tzanetos Georgina Tzanetos is a former financial advisor who has been active in financial media for the past six years. She holds a master's in political economy from NYU, where she studied distressed labor markets.