Grocery Inflation Slows to Lowest Rate in Nearly 5 Years
A lot of eyes were on today’s inflation report from the U.S. Bureau of Labor Statistics (BLS), following a topsy-turvy month marked by tariff and trade controversies. The latest report showed that the pace of inflation was slower than analysts had projected, with the grocery sector seeing real declines.
The overall Consumer Price Index (CPI) rose 0.2% in April, after dipping 0.1% in March. On a year-over-year (YoY) basis, the CPI for all items is up 2.3%, the lowest yearly rate since February 2021.
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Grocery prices, which have been at the heart of many inflation-related discussions, fell 0.4% last month. That’s the largest drop since September 2020. The food-at-home index is still up 2% YoY, compared to the 3.9% YoY rate for food away from home.
Within the grocery sector, five of the six indexes decreased last month. The much-talked-about price of eggs was down 12.7% in that time frame, while the larger category of meats, poultry, fish and eggs dropped 1.6% in April. Other categories experienced declines, too, including fruits and vegetables (-0.4%), cereals and bakery (-0.5%), dairy and related products (-0.2%) and “other” food at home (-0.1%).
The nonalcoholic beverage segment was an outlier, with the CPI up 0.7%.
Of note to retailers that operate fuel stations, gas prices also tracked downward by a scant 0.1% in the month before the summer travel season heats up on Memorial Day.
Grocers’ comparatively strong position in the fight for the consumer food dollar was evident again this month. The food-away-from home index rose 0.4% in April, with hikes in both full-service and limited-service meals.
Leaders from FMI - The Food Industry Association reacted to the latest government data. “Today’s CPI numbers should be welcome news for grocery shoppers, as food-at-home inflation significantly cooled for the month,” said Andy Harig, VP of tax, trade, sustainability and policy development at FMI.
He sounded a note of caution about the current and upcoming operating environment, as volatility remains. “However, given the fluid situation around tariffs, it remains to be seen whether and how much these levies will impact food prices going forward. We remain optimistic that they will have a limited impact on food prices in the near term and a more stable food price environment will take hold as we head into the summer,” Harig remarked.
Steve Markenson, VP of research and insights at FMI, also weighed in on the report. “The uncertain economic environment continues to be on the minds of consumers, although their concerns have eased somewhat since last month,” he said, citing FMI’s May Grocery Shopper Snapshot showing that 38% of shoppers have positive expectations for the year ahead, a slight uptick from April. “For 53% of consumers, down from 57% in April, the impact of tariffs on grocery prices remains their top concern. Today’s CPI numbers should help to continue easing these concerns.”
