Food Inflation Lingers This Summer

Inflation, while down from its 2022 highs, remains stubborn. The latest Consumer Price Index (CPI) from the U.S. Bureau of Labor Statistics (BLS) revealed a 0.2% gain in overall inflation and a 0.3% uptick in the food-at-home sector.

The overall CPI rate mirrored the 0.2% rise in June and was attributed to higher prices for shelter and motor vehicle insurance. The increase in the grocery index reversed what had been a cooling trend, following declines in March and April, a scant 0.1% bump in May and a flat 0.0% rate in June. The last 0.3% increase came in February.

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On a year-over-year (YoY) basis, the CPI for food at home is up 3.6%, slightly above the general inflation pace of 3.2%. In July, prices went up in four of the six main grocery categories, according to BLS.

The biggest leaps came within the meat, poultry, fish and eggs category, which went up 0.5% last month, mostly fueled by higher beef prices. The CPI for beef climbed 2.4%, caused in part by drought conditions that impacted the cattle market.

Elsewhere in grocery, the inflation rate for dairy and related products rose 0.5% in July on the heels of four previous declines, while fruits and vegetables edged 0.4% higher. The index for “other” food at home increased 0.2% in that time frame. The CPI for cereals and bakery products and nonalcoholic beverages held steady.

Nikki Baird, VP of strategy at retail tech company Aptos, said that the latest news reflects the ongoing need to navigate challenges. "The CPI results are a positive for consumer spending overall. But there are many signs beyond CPI that show that even middle class consumers are feeling the impact of inflation on spending. With over $1T in credit card debt, and student loan payments resuming, there are a lot of other pressures on consumer spending looming, but it looks like rapid rises in prices for everyday goods isn't going to be one of them,” she declared.

Foodservice prices continued an upward trend, albeit at a lower pace. The CPI for food away from home inched up 0.2% last month, the lowest rate of 2023 for that sector. The foodservice index is 7.1% higher than in July 2022.

In the non-food area, apparel prices remained unchanged in July following six months of increases. Fuel inflation ebbed a bit, with the CPI for gasoline coming in at 0.2% after a 1.0% rise in June.