Cheese Prices

Has anyone else noticed that the price of high-end cheese has increased much faster than most other foods over the past five years or so? To give a specific example, back in 2002, I could find Parmigiano Reggiano for under $10/pound, and now I rarely see it for less than $15-16/pound. Montgomery cheddar, from Neal's Yard, used to sell for about $13/pound in Seattle, and now I can't find it for less than $20. More generally, the average price for high-end cheeses used to be around $15-16/pound, going up to as high as $20-23, whereas now the standard seems to be $20-22, all the way up to $30-35.

My guess is that the price of imported cheeses has risen due to the recent weakness of the dollar. The price of domestic cheese has risen similarly, though. I suspect that this is the law of one price combined with the fact that the market for high-end cheeses has traditionally been dominated by European cheesemakers, leaving domestic artisanal cheesemakers unable to step up production quickly enough to make up for the reduction in supply.

I believe the price of commodity-grade cheese has been fairly stable, but I haven't paid as much attention to that. Does anyone have any additional observations or alternative hypotheses?

While we're on the topic of cheese, I want to take the opportunity to shill for Cato Corner, whose booth in the Union Square market in Manhattan I had the good fortune to stumble upon a few years ago.

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Real inflation

First, inflation statistics typically omit food, so one can't really judge food prices against the standard inflation numbers one always hears. (This is in part because food prices are volatile for non-monetary reasons and so add noise to the statistic)

Second, as you note, the weakness of the dollar has given domestic cheesemakers some breathing room to raise prices. Their big input goods, dairy and dairy processing, are price-controlled or socialized in most of the big regional markets, which means that cheesemakers get a big help on the price elasticity front -- their suppliers can't jack up prices to recapture some of that profit.

I've noticed the same thing

I've noticed the same thing with regards to high-end cheeses here in Michigan. I don't have an explanation, just felt like commiserating.

"A free man must be able to endure it when his fellow men act and live otherwise than he considers proper. He must free himself from the habit, just as soon as something does not please him, of calling for the police." - Mises

Long lead time

Good Parmesan has to age for two years before it is ready to consume. Perhaps the current market was underestimated two years ago and it is now impossible to expand production.

Soft cheeses (that don't mature over such a long time) may be able to track the higher prices of hard cheeses in the time between consumers getting used to high prices and new competitors entering the market. This could be particularly true of artisans who need to build up their experience before their product is fully developed.

Processed cheese can be quickly manufactured from failed cheeses, so you may even see a glut develop and prices drop in this sector as more cheesemakers enter the market.

Do you see similar (or even more exaggerated) trends for wine, whiskey or other goods produced over many years?