Colorado Springs shoppers hunting for a summer bargain in the freezer aisle may find more relief than expected this season, as a broad drop in dairy commodity prices works its way to grocery store shelves.
Even as summer heat drives up demand for frozen treats, the average price of a half-gallon ice cream container in the United States was below $6 last month, according to data released by the Bureau of Labor Statistics. For the past two years, these frozen desserts had averaged around $6.26 per container.
The primary driver behind the dip is the price of butter, which came down nearly 9% year-over-year according to last week's Consumer Price Index. Meanwhile, other ice cream ingredients like milk and sugar saw slight price increases, according to CPI data.
In 2023, butter — which is traded on commodity exchanges — was priced at $3.50 per pound, its highest level since 1965. It has since dropped to $1.65 per pound, or 31% below the five-year average.
Fresh cream, valued for its rich butterfat content, is the most expensive ingredient in ice cream. Selective breeding and high-tech dairy production have increased the supply of butterfat and driven wholesale prices down, with over $11 billion invested in new manufacturing processes in America's dairy industry, according to the International Dairy Foods Association. These investments have reshaped the way farmers use advanced technology and genetics to produce milk more efficiently.
"What we are seeing over the past five to seven years is dairy farmers using genetics and feeding for breeding for fat, and so the average percentage of fat in 100 pounds of milk has gone up substantially," said Phil Plourd, the executive director at the Wisconsin Dairy Products Association and an insights advisor at agricultural data company Ever.Ag.
The development is welcome news for manufacturers, since the FDA requires products to contain at least 10% milkfat by weight to legally carry the label of "ice cream." A recent poll by the International Dairy Foods Association and Morning Consult found that 89% of respondents said flavor is the most important consideration when purchasing ice cream, outpacing price and container size.
Retailers like Whole Foods and Target have promotional pricing on ice cream products throughout the summer, and data from CartHappy, which tracks grocery prices via Chrome extension, shows Walmart changed prices more than 1,000 times on its Great Value half-gallon ice creams over the past two weeks despite only selling seven flavors.
While prices have cooled around National Ice Cream Day, Ever.Ag expects wholesale butter prices to climb slightly for the rest of the year — to around $1.70 per pound — due to increased baking around the holidays and strong demand from foreign buyers.
Whether wholesale butter prices stabilize or resume climbing heading into the holiday baking season will determine how long the current relief at the freezer aisle lasts for local shoppers.