Food Inflation Rises in 4 Categories
It may be a new year, but the inflation data is all too familiar. The latest Consumer Price Index (CPI) numbers from the U.S. Bureau of Labor Statistics (BLS) show a 0.4% uptick in overall inflation and a 0.3% bump in food-at-home inflation last month.
The stickiness of higher CPIs was evident across grocery categories. Prices in the cereal and bakery category went up 1.2% after dipping 1.1% in November. The CPI for meats, poultry fish and eggs rose 0.6%, driven by a 3.2% hike in egg prices at a time of avian influenza and regulatory issues that impacted supply and demand. The “other” food at home segment edged up 0.3% and the index for dairy and related items increased 0.2% in the closing month of 2024.
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Some categories saw an easing of prices. Ahead of Dry January, the CPI for nonalcoholic beverages dipped 0.4% following a 1.5% increase the prior month. Fruits and vegetables experienced a scant 0.1% decline in December.
For retailers that sell fuel, there was some pain at the pump in December. Gasoline prices went up 4.4% during the month, following a 4.6% drop in October and a slight 0.6% gain in November. Meanwhile, the food-away-from-home index went up at 0.3% in December, reflecting the overall inflation stubbornness in the general food and beverage sector.
The results show that the inflation situation remains volatile as the White House is changing hands this month. “The CPI numbers released today continue to show how tenacious inflation can be,” said Andy Harig, VP of tax, trade, sustainability and policy development at FMI - The Food Industry Association. “Even as the topline food price inflation numbers rose last month, much of this increase was driven by a few specific commodities like eggs, bacon, and cereals and bakery products. It is important to keep an eye on these and other commodities even as the food industry works diligently to address ongoing supply challenges."
He continued on a more positive note, “The good news is that consumers tell us they are optimistic about the year ahead, as 44% of grocery shoppers expect their household finances will be better off a year from now than they are today. This bodes well for long-term inflation prospects and demonstrates that consumers continue to be resilient.”
Matt Pavich, senior director of strategy and innovation at Revionics, an Aptos Company specialized in pricing optimization, also weighed in. "The release of today’s CPI report is a pivotal moment as it marks the last CPI report before key policy changes may take effect that could impact pricing such as tariffs. The looming risk of tariffs, combined with rising concerns surrounding avian flu and crop challenges on key products like Brazilian coffee or cacao from West Africa pose some critical inflationary and pricing risks for retailers and consumers in the coming months,” he observed.
Pavich also emphasized the ongoing importance of pricing in the grocery business. “We're in an interesting time as next-gen AI empowers retailers to make swifter, more informed price moves. For retailers to protect, and even grow, their market positions in these uncertain times, they must consider evolving their pricing practices with dynamic processes and data-driven pricing solutions using cutting-edge tools,” he remarked.
