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The Great Limeflation

Turns out consumers in the U.S. are going to be paying a lot more for limes this year in anticipation of Cinco de Mayo celebrations – jumping from about 30 cents to 60 cents per lime, or roughly double what people ordinarily pay. This estimate doesn’t account for the fact that wholesalers are expected to be hit even harder, likely triple to quadruple what they’re used to paying for limes (retailers tend to absorb part of the price increases passed along to consumers). Here at Premise we’re calling it the Great Limeflation – let’s look at the data backing this up:

Limes

Figure 1 plots the weekly price of limes and lemons in the U.S., Mexico and Brazil, accounting for differences in the types of limes, including their size and where they’re available (the type of store).

Figure 1: Consumer Prices Non-Organic Limes/Lemons (weekly) Lime prices in the U.S. spiked rapidly just after the new year, consistent with the sharp change in prices associated with reports of Mexican drug cartels holding up the supply of limes and heavy rains in Mexico limiting the supply.

While price increases in the U.S. are steep, they’re even worse in Mexico. Although we only have data through the end of February, prices are up over 300 percent in Mexico, compelling evidence that the rise in lime prices in the U.S. is largely due to our reliance on imported limes. A completely different story is playing out in Brazil, a country relatively self-sufficient for producing limes. Prices for limes in Brazil are down roughly 30 percent in the past eight months.

On the bright side, lemon price inflation is non-existent in the U.S. and lemons are a readily available substitute. But okay, we acknowledge they may not be a perfect substitute for your margarita.

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