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Is Food Inflation Making a Comeback?

Consumer Price Index shows largest grocery gain in nearly four years
Photograph: Shutterstock

In what should be welcome news to grocery retailers, prices at U.S. grocery stores were up by 1.2% in February as compared to same period last year, representing the largest 12-month increase in food prices in nearly four years, according to the latest data from the U.S. Bureau of Labor Statistics.

Prices also increased sequentially, with the bureau’s Consumer Price Index for food at home up by 0.4% from January.

cpi chart

All six major grocery store food group indexes showed increases from January. The index for fruits and vegetables rose 0.9% in February after declining in January. The fresh vegetables index increased 1.9%, while the fresh fruits index declined 0.3%. The indexes for nonalcoholic beverages and for cereals and bakery products both increased 0.7% in February. The index for dairy and related products increased 0.3% in February after falling 0.3% in January. The index for other food at home also rose 0.3%, while the index for meats, poultry, fish and eggs increased 0.2% in February.

The 12-month percentage change showed that retail prices rose in all six major grocery categories, with increases ranging from a low of 0.1% (dairy and related products) to a high of 2.8% (nonalcoholic beverages). The year-over-year increase was the highest since April of 2015.

The increasing prices suggest retailers are passing along at least some of their own cost increases to consumers. Grocery retailers have seen only modest inflation over the past few years, in part due to heavy price competition between retailers but also due to oversupply of some fresh categories and slackening demand in others, analysts said.

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