You’ve likely seen the headlines during the past week regarding the price of ground beef surpassing $4/lb. for the first time ever. Indeed, the Bureau of Labor Statistics (BLS) data placed monthly ground beef prices at $4.013/lb. in August.
The accompanying chart provides some context around the BLS retail beef price series, including that of ground beef. The chart highlights price trends for overall retail beef prices, lean and extra lean ground beef, and ground beef, respectively. Additionally, the graph also includes the 12-month moving average reflecting the price difference between retail beef and ground beef prices. Several key factors are important within the data.
The ground beef market is segmented (ground beef is not ground beef is not ground beef). Not surprisingly, consumers are willing to pay higher prices for leaner beef. And that market has gained some price competitiveness in recent years, primarily due to the loss of lean finely textured beef (LFTB) and declining slaughter numbers.
Meanwhile, while popular press coverage focuses on the seemingly important threshold of $4/lb. ground beef, the rest of the retail market and whole-muscle cuts also continue to march higher. However, it was just a month ago that the BLS retail beef price series eclipsed $6. Perhaps most important are the relative price differences within the market.
While there may be some coverage on the $4 mark, the move isn’t surprising nor out of the ordinary considering the long-run historical pattern in which retail price averages consistently have marched $2 ahead of ground beef prices. In other words, meat case pricing is all relative.
How do you perceive retail pricing differences within the market? At what point might these relationships be altered by price resistance within the meat case? Or is this all good news – retailers continue to have pricing power and have proven successful in raising prices for all categories of beef? Leave your thoughts in the comment section below.
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