Grocery Inflation Flat, But Issue Still Bumpy
As grocery prices remain a hot topic – and came up during the Sept. 10 presidential debate – the latest government data shows that the rate of inflation continues to stabilize. According to the Bureau of Labor Statistics (BLS), the overall Consumer Price Index (CPI) rose a negligible 0.2% from July to August, the same rate as the previous month.
The CPI for food at home was unchanged during that period, while the index for food away from home went up 0.3%. On a year-over-year (YoY) basis, food-at-home prices are up 0.9%, food-away-from-home prices are 4% higher and the overall CPI rate experienced a 2.5% gain.
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Still, grocery prices are about 20% higher than they were in 2019, a statistic that has kept the issue in the public discourse. “During last night’s presidential debate, candidates Donald Trump and Kamala Harris briefly raised the issue of food price inflation. Affordability is a core value for grocers and an essential component of our competitive industry. We welcome and encourage a national discussion about inflation, prices and the many factors that influence the economy, but this conversation must be informed by data and focused on solutions rather than politics,” said Andy Harig, VP of tax, trade, sustainability and policy development at FMI - The Food Industry Association.
On that point about data, the CPI for meats, poultry, fish and eggs went up 0.8% in August, driven largely by a 4.8% hike in egg prices, while the index for dairy and related products edged 0.5% higher. Other grocery departments experienced a dip in prices from July to August: the nonalcoholic beverages index fell 0.7% after rising 0.5% in July and the CPI for fruits and vegetables declined 0.2%. Prices for cereals and bakery products edged down a scant 0.1% last month.
“Food retailers’ profit margins are, and always have been, extremely tight – just 1.6% last year. The entire food industry works tirelessly – amidst fierce competition – to address inflation and keep prices as low as possible. Today’s inflation numbers are encouraging, even as the food industry continues to face economic headwinds that increase the costs to produce food and get it to store shelves,” observed Harig.
The ongoing upward trend in restaurant menu prices was evident during the last month of summer. According to BLS, the price of limited-service meals increased 0.3% in August and the index for full-service meals went up 0.2% during that time frame.
An industry analyst shared additional takeaways from the latest government data, heading into a pivotal fall sales season. Nikki Baird, VP of strategy and product for Aptos Retail, said that consumers are more discerning in the wake of the inflationary era. "The American consumer has been more resilient than anyone could have expected. But that isn’t a free pass for retailers to underinvest in their stores,” she declared, sounding a cautionary note. “Investments in labor, investments in customer experience tech, investments in digital transformation of the store. It’s been too easy to kick the can down the road until you suddenly realize there’s no road left."
In recent polls, consumers expressed wariness about the current and future marketplace. According to research conducted by Ipsos, despite lower inflation rates and unemployment rates consumer confidence has not rebounded. The U.S. Federal Reserve reported that respondents in one of its recent surveys projected an inflation rate of 3% a year from now and 2.8% five years from now.
