Declining dairy production has sent butter prices soaring as U.S. households prepare for the holiday baking season.

The price of butter—one of the most important ingredients in baked goods—has risen 24.6 percent since last year, averaging $4.77 per unit in August, according to the Bureau of Labor Statistics. The inflation rate for butter prices outpaced most other grocery items, with the exception of eggs, which were up 39.8% from last year.

While consumers paid 13.5% for the overall price of groceries since last year, they paid an even higher 16.2% for dairy products. Grocery prices rose slightly in July-August after hitting record highs in June-July, Housekaart News reported.

according to Wall Street Journalthe rise in butter prices is due to a decline in milk production due to factors such as cow shortages and labor shortages, although farmers have reportedly been adding to their herds.

As a result, UDSA records show that butter production fell 2% in July, while butter in cold storage facilities has also declined 21% since the previous month.

A Minnesota dairy farmer noted that he had to reduce the plant’s butter production from 5 percent to 10 percent due to a shortage of staff.

Marshall Reece, senior vice president of Associated Milk Producers Inc., told The Magazine.

Before the pandemic, that wasn’t a problem, Reese noted.

Another reason for the decline in butter production is that hot summer temperatures are negatively affecting the milk production capacity of dairy cows, especially in California, where the ongoing drought has led to reduced animal feed, a dairy expert told Reuters Bloomberg.

High demand from retailers has also led to higher butter prices ahead of the fall and winter baking seasons.

Reese has warned retailers against “crazy” discounting butter over the holidays, as dairy farmers may not be able to keep up with production to supply the market.

You can follow Ethan Letkeman on Twitter @EthanLetkeman.

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