White House Digs Into Grocery Inflation
Inflation – especially the elevated price of food – has become a political flashpoint in an election year. The subject remained top of mind this week, as the Biden Administration published a blog post on grocery inflation.
In the report penned by the Council of Economic Advisors (CEA), the White House reiterated the latest Consumer Price Index (CPI) information showing that food-at-home prices inflation is easing and noted that wages have increased. “Because wage growth has outpaced grocery price growth, it takes slightly less work to purchase a bag of groceries relative to a year ago,” the economists declared.
Additionally, the CEA post highlighted data showing that 27% of the average consumer’s grocery bundle experienced a price decline from May 2023 to May 2024. According to their information, 77% of the grocery basket was less affected by inflation than last year.
The White House report highlighted several food retailers that have announced price cuts in recent months, including ALDI, Amazon, Target, Walgreens and Walmart. At the same time, however, the Administration contends that markups in the grocery business remain higher than other retailers’ markups.
“As the economy continues to normalize after COVID, there is still room for margins in this sector to recede, and for those lower markups to be passed along to consumers in the form of further grocery price relief for American households,” the economists wrote.
While the White House released its report seeking to balance the scale between wages and food inflation, many consumers say they are still feeling the pinch. A new survey conducted by the University of Michigan showed that shoppers remain concerned about inflation and incomes: The overall consumer sentiment index hit 65.6 in June, down from 69.1 in May.
“Sentiment is currently about 31% above the trough seen in June 2022 amid the escalation in inflation. Assessments of personal finances dipped, due to modestly rising concerns over high prices as well as weakening incomes. Overall, consumers perceive few changes in the economy from May,” observed Joanne Hsu, the university’s Surveys of Consumers director.
Similarly, fresh research from Purdue University reveals that 80% of consumers think food prices have gone up “a little or a lot” over the past year. According to Purdue’s Consumer Foods Insights Report for May 2024, 56% consumers selected “food” when asked which goods and services experienced the largest yearly price hike.
“While food inflation has slowed in 2024, consumers are feeling the cumulative effect of the high inflation we’ve experienced,” said the report’s lead author, Joseph Balagtas, professor of agricultural economics and director of the school’s Center for Food Demand Analysis and Sustainability.
