(Image source: U.S. Bureau of Labor Statistics, May 2023)
Indicating that the easing of grocery inflation in March may not have been a fluke, the latest data from the U.S. Bureau of Labor Statistics (BLS) shows that food-at-home prices ebbed again in April. The Consumer Price Index (CPI) for food at home declined a slight but meaningful 0.2% last month following a previous 0.3% dip.
On a year-over-year basis, the CPI for food at home is up 7.1%, which is elevated over the norm but down from the 11.3% rate in the opening month of 2023. Within the grocery sector, shoppers encountered lower prices across several categories: BLS reports that four of the six major grocery store indexes posted decreases in April.
The CPI for dairy and related products fell the most (-0.7%) last month, while the index for fruits and vegetables went down by 0.5%, the price of meat, poultry, fish and eggs slipped 0.3% and nonalcoholic beverage prices saw a slight 0.1% downturn. The CPI for cereals and bakery and for “other” food at home both increased 0.2% in April.
Grocers can find some relief in the second consecutive month of price drops, said Andy Harig, VP of tax, trade, sustainability and policy development for FMI - The Food Industry Association. “The April CPI report shows promising progress for shoppers, as inflation – and subsequently grocery prices – continue its steady, albeit slow, decline. Following recent price declines in the volatile commodities of meat, poultry, eggs and fish, we are seeing that while prices for food at home fall slowly, we are still headed in the right direction,” Harig remarked.
While grocery prices are coming down from their highs, food-away-from home prices rose 0.4% for the month. The CPI for limited-service meals edged 0.6% higher in April and full-service meals ticked up by 0.1%.
On a macro level, inflation remains somewhat stubborn. The overall CPI notched a 0.4% gain in April, attributed in part to higher gas prices and sales prices for used cars and trucks.
Jack Kleinhenz, chief economist at the National Retail Federation (NRF), noted there are obstacles in taming inflation in a greater way. “The World Health Organization says the pandemic is over, and the U.S. government has ended its declaration of a public health emergency. But that doesn’t mean the economic challenges brought on by COVID-19 are over,” he said in the latest issue of NRF’s Monthly Economic Review. “For the past year, the Federal Reserve has been trying to bring rampant inflation under control by raising interest rates. The effort has yet to reach its goal, and results from the first quarter show taming inflation without tipping the nation into a recession remains a formidable challenge.”
That said, Kleinhenz observed that the U.S. economy has been buffered from worse recessionary headwinds thanks to retailers reducing their built-up inventories and consumers who continued to spend during the first part of the year.