As grocery prices rise, cheese and butter get cheaper

When it comes to grocery prices, inflation has been steep. But there are a couple of things that are very likely to be in your fridge that have actually been getting cheaper: butter and cheese.

The prices of both were down year-on-year in August's consumer price index report — down 3.8% for cheese and related products, while butter got 8% cheaper. The USDA is forecasting lower wholesale prices for both into next year.

Ben Laine, senior analyst at Terrain Ag, says he is always thinking about dairy. This week, he’s headed to an industry conference he called “a dairy nerd fest.”

For the dairy nerds, lower cheese and butter prices are not surprising. “But when I hear people in the grocery store talking about butter being reasonably priced, I think it's a good sign to me it's reaching the consumer,” Laine said.

Prices always come down to supply and demand, but in this case, it’s more on the supply side, said Cara Murphy, senior manager of dairy market intelligence at HighGround Dairy.

“It's just we have so much. We just have too much butter,” she said.

The same goes for cheese. Murphy said lately, U.S. dairy cows have been producing more. A handful of new cheese production plants recently opened in the Midwest. Plus, one of the main buyers is having a hard year.

“The food service sector is not doing very well, and that sector uses a significant amount of cheese,” she said.

People aren’t going out for a cheeseburger or cheese pizza as much. And since unused dairy products have a limited shelf life, they might end up at your neighborhood grocer on sale.

“There's a gas station in Wisconsin that if you could get the 99-cent butter, it's always the talk of the town,” said Kathleen Noble Wolfley at analytics company Ever Ag.

She admitted four sticks of butter under a dollar is an unusual deal. But she said she expects butter and cheese prices across the country to be relatively low for a while, partly because of a food trend that, on the surface, doesn’t seem to have anything to do with dairy.

“The protein craze absolutely plays into some of the dairy dynamics today,” Wolfley said.

That giant tub of chocolate protein powder likely contains whey, which historically was just a byproduct of cheese making.

“But here in 2026, it's looking more like whey is the big driver,” she said.

Bottom line? The cheese for your holiday casserole or butter for your apple pie will probably be a little cheaper this year.