Inflation in Packaged Foods: Causes and Implications of Price Growth

March 2024

Global packaged food sales are set to exceed USD3 trillion in 2024, with volumes growing over the forecast period. Even with inflationary pressures moderating, each grocery category (staple foods, dairy products and alternatives, snacks, and cooking ingredients and meals) has seen price increases. Staple foods is benefiting from consumers’ focus on the “essentials”. The affordability crisis has magnified consumer purchase polarisation, exposing new and important strategy considerations.

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This report comes in PPT.

Key Findings

Continuing cost and demand pressures are contributing to value growth

Numerous factors are contributing to rising food costs – from commodity constraints and climate change, to wage rises and geopolitical conflicts. Steady global population growth will lead to greater demand for packaged foods. In addition, rising expectations regarding food quality will underpin future price growth. With essential raw materials under pressure, such as cocoa and olives, 2024 will see further growth in retail value.

Shift in consumers’ value could mean greater opportunities for healthy and sustainable foods long-term

Consumers are more focused on value and savings than before – potentially benefiting private label. Though lower prices are the core concern now, the cooling down from the affordability crisis is set to provide opportunities for healthy and sustainable products, as polarisation in consumer demand surfaces and wages rise to afford them – specifically products addressing mental and gut health, as well as those that are high in protein and natural products.

Focus on essentials and the nuances of consumer value reveal the need for strategic points of focus

As a consequence of the cost-of-living crisis, consumers are focusing on fulfilling basic needs. However, demand for better quality and more nutritious options remains, contributing to rises in prices, and exposing key points for strategy consideration. Whether classified as a high (eg edible oils) or fragile demand category, or a volume gainer or a price mover (eg snacks), certain strategic elements are crucial to maximise demand.

Targeted pricing and volume recovery to be key focuses moving forward

With inflation showing signs of moderating, the industry is moving towards more targeted price increases that vary at a regional or category level, to offset costs. In addition, innovative launches that support strategic volume growth and maintain margins are expected to be seen in the mid term.

Key findings
Despite declining inflation in 2024, high grocery costs remains a burden
Supply chains and farmgate prices remain under pressure in 2024
The many layers of global inflation
Cooling inflation is being met with supply challenges, protests, and demand for better quality
Fluctuating commodity production puts further pressure on prices
Packaged grocery demand adjusts with inevitable price increases landing across categories
Staple foods inflation surges through war and disease…
…with climate change impacts meaning higher prices are here to stay
High prices lead consumers to look for alternatives: The case of rice, pasta and noodles
Prices surge in cooking ingredients and meals driven by olive oil and premiumisation trends
Unit price rises have significantly impacted retail volume sales of edible oils
Snacks prices rise as stricter policies seek to modify demand for the category
Dairy value sales soar due to price rises in 2023, but prices are forecast to stabilise
Both low and high inflation markets present opportunities and risks for food companies
Savings shrink across most of the world as price of essentials grow
The cost-of-living crisis leads to trade-offs in health and sustainability
Consumers’ limited ability to afford healthier diets is likely to exacerbate obesity rates
Desire for healthier and sustainable foods is simmering but saving remains priority
Consumer response depends on income, brand loyalty and perceived value
The inflationary context favours private label value share growth in packaged food
Just Egg achieves price parity and points out “Plants don’t get the flu”
Tackling inflation in the dairy industry through targeted strategies
Lindt partners with cocoa-free brand ChoViva to launch vegan tablet
Kraft’s 2024 volume growth forecasts signal expectations for major cooking aids players
The severity of grocery inflation is expected to moderate, but pricing will remain dynamic
Prices forecast to grow across categories, with staple foods benefiting as a grocery priority
With some exceptions, most packaged groceries are set to become price movers
Essentialism, and underlying novel demands, are shaping category performances
While retailers are becoming more active in monitoring and tackling price rises
Opportunities for food players include new recipes and/or new pricing strategies
Volume demand, economic factors and consumer behaviour to determine growth potential
Key findings


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