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11/10/2022

Inflation Cools, But Food Prices Still Higher in October

CPI for food at home rises at slowest rate of the year
Lynn Petrak
Senior Editor
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CPI Oct
The CPI for meats, poultry, fish and eggs went up 0.6%. (Source: U.S. Bureau of Labor Statistics, released Nov. 10)

First, the good news: The white-hot inflation rate for food at home has eased for the first time in almost a year. According to the Bureau of Labor Statistics arm of the U.S. Labor Department, the Consumer Price Index for food at home rose 0.4% in October, nearly half the rate of the 0.7% hike in September.

That said, food prices are still going up at a time when consumers are getting ready to gather around holiday tables and prepare for holiday celebrations and gifting occasions. The CPI for food at home is 12.4% higher than this time last year, compared to the overall CPI rate of 7.7%.

[Read more: "Grocers Talk Turkey on Product Availability, Variety"]

Some of the biggest leaps in food-at-home prices came from the cereal and bakery categories, which rose 0.8% for the month. The CPI for meats, poultry, fish and eggs went up 0.6%, while the index for nonalcoholic beverages ticked up by 0.5%. Prices fell 0.9% in the fruit and vegetable segment, reversing a 1.6% increase during the prior month. Shoppers also paid less for dairy and related products in October, as those items declined by a slight 0.1%.

The takeaway for grocers, said Matt Pavich, senior director of retail innovation at Revionics, is that it is still an inflationary environment in which consumers are seeking deals. “Retail promotions are a huge opportunity in inflation. Maybe it's adjusting your promotions, eliminating profit-draining promotions altogether, or addressing lumpy inventory issues. Retailers are looking at all of their options right now to correct issues earlier in the supply chain; pricing is the fastest lever to do this,” he remarked, noting that artificial intelligence is proving to be a game changer for retail pricing.

Pavich also underscored the many nuances of pricing in today’s operating circumstances. “Inflation isn’t as simple as ‘one cost goes up so the price goes up as well’ – it involves numerous decision points which can impact the end cost that eventually hits retailers. Adding to this complexity is a temporal element. It takes time for cost increases to move through the entire production and supply chain and it moves at different rates for different vendors, suppliers and retailers,” he said.

FMI, the Food Industry Association, weighed in on the latest inflation report, emphasizing food retailers’ resilience and innovation in the wake of ongoing challenges. “The October CPI further illuminates the challenge that Americans have faced for months. The cost of consumer goods continues to rise, adding pressure on budgets across the country,” said Andy Harig, FMI’s VP, tax, trade, sustainability and policy development. “Grocery stores – and the entire food industry – are doing all they can to ensure Americans have options to stay within their grocery budget and remain committed to working with their customers to help mitigate the impacts of inflation. Today’s numbers make it clear that this is still a difficult time for consumers. While myriad factors influence food prices, the food industry is collaborating throughout the entire supply chain to keep costs low for consumers.”

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