Dive Brief:
- Food-at-home prices increased 12.4% during the past year, according to the Bureau of Labor Statistics’ Consumer Prince Index for October. On a monthly basis, the price of groceries increased by 0.4% from September, the smallest monthly increase since December 2021.
- Four of the six major grocery food and beverage categories tracked by the BLS saw prices increase in October. Fruit and vegetable prices fell 0.9% over the month, while dairy and related products edged lower by 0.1%. The price of eggs, which increased 10.1% as bird flu impacted production, contributed to a 0.6% jump in meats, poultry, fish and eggs. Cereal and bakery products rose 0.8%.
- While food inflation is expected to continue into the holiday season, consumer prices are showing sign of moderating, meaning there could be less sticker shock on grocery items, according to analysts.
Dive Insight:
While food prices remain elevated compared to a year ago, the monthly increases have been less significant for the last three months.
Kayla Bruun, an economic analyst at Morning Consult, said the research firm has observed in recent weeks that price inflation was slowing in categories such as food. This month’s CPI numbers show consumers are more willing to accept price increases now than they were earlier this year, she said.
“What we saw in October was these pretty dramatic declines in price sensitivity,” Bruun said. “There were signs of loosening capacity and improved availability of items, as well as consumers having less sticker shock and feeling less pressure to trade down on goods.”
According to Bruun, while supply chain shortages are still leading to purchasing difficulty for consumers, there are fewer empty shelves than in the previous two years. Shopping habits also are being impacted as inflation shows signs of easing and consumers show a willingness to spend more on food items for the holidays.
“There is more of an urge to prioritize food spending,” Bruun said. “Prices are still high and consumers are responding to that, but the relative trend has turned more in a positive direction recently, whereas in August and September it was only seeming to get worse with more trading down.”
One item that could face inflated prices for the foreseeable future is eggs. Elevated costs are leading to a 2.2% decline in demand for shelled eggs this week despite the holiday season looming, according to a USDA analysis released on Thursday. The department attributed this to reports about higher egg prices.
The persistence of avian influenza in the poultry supply chain also is leading to a shortage of birds for the production of eggs and meat. Thanksgiving turkey prices are projected to be 23% higher this year, according to a recent Wells Fargo analysis. It estimated 2.5% of the bird’s annual population has been lost to the outbreak.
