The weekly average price of grade AA butter hit $2.66 per pound in the first week of January, up 40% when compared to the same period a year ago, according to a USDA report. Butter prices also rose 3.7% during December.
Labor shortages and higher packaging material costs, as well as reduced livestock herds, are all explanations for the increase. In a recent weekly report, the USDA noted that ongoing labor and freight shortages will continue to limit the butter supply in 2022. This could mean continuing price increases throughout the year. Year to date, overall butter production has also declined 2.8%.
The huge increase in butter prices has not been seen in other dairy products. For instance, the price index for dairy rose 1.6% in 2021, compared to 6.4% for all food at home, according to the Labor Department.