Food price inflation tailed off in December amid continued relaxation in the Consumer Price Index (CPI), according to new data released early Thursday.
Month-to-month, the December CPI for All Urban Consumers dipped 0.1% (seasonally adjusted), the only decrease in 2022, the U.S. Bureau of Labor Statistics (BLS) reported Thursday. Except for flat growth in July, the December decline followed upticks of 0.1% in November, 0.4% in October and September, 0.1% in August, 1.3% in June, 1% in May, 0.3% in April, 1.2% in March, 0.8% in February and 0.6% in January.
On a year-over-year basis, the December CPI climbed 6.5% (unadjusted), down from a 12-month increase of 7.1% in November. The December figure marked the lowest annual gain since October 2021, BLS noted, compared with year-to-year growth in 2022 of 7.7% for October, 8.2% for September, 8.3% for August, 8.5% for July, 9.1% for June, 8.6% for May, 8.3% for April, 8.5% for March, 7.9% for February and 7.5% for January.
The food CPI—including food-at-home and food-away-from-home—fell to a 0.3% month-over-month uptick in December from 0.5% in November, according to BLS. The food index remains down from monthly increases of 0.6% in October, 0.8% in September and August, 1.1% in July, 1% in June, 1.2% in May, 0.9% in April, 1% in March, 1% in February, and 0.9% in January.
Similarly, over 12 months, growth in the food CPI receded to 10.4% in December from 10.6% in November. The annual gain, however, has remained in double digits since early this year despite recent declines from 10.9% in October, 11.2% in September and 11.4% in August. Those followed steady increases to 10.9% in July, 10.4% in June, 10.1% in May, 9.4% in April, 8.8% in March, 7.9% in February and 7% in January.
The food-at-home CPI for December showed an 11.8% year-over-year uptick, indicating still-high grocery inflation but a decrease from 12% in November. The annual gain hadn’t been below 12% since May but continued a decline from 12.4% in October, 13% in September and 13.5% in August. The October and September numbers had marked the end of escalating 12-month gains since the start of the year, as the food-at-home index rose 13.1% for July, 12.2% for June, 11.9% for May, 10.8% for April, 10% for March, 8.6% for February and 7.4% for January.
Sequentially, the food-at-home CPI edged up 0.2% for December, down from 0.5% in November and the smallest monthly increase since December 2021 (0.4%). The 0.4% uptick for October represented a decrease from 0.7% in September and August, when the monthly gain was the first below 1% since April. That compared with hikes of 1.3% in July, 1% in June, 1.4% in May, 0.9% in April, 1.5% in March, 1.4% in February and 1% in January.
Three of the six major grocery store food group indices for food-at-home gained on a monthly basis (adjusted) in December. The meat, poultry, fish and eggs index rose 1%, while other food at home and nonalcoholic beverages were up 0.4% and 0.1%, respectively. Indices experiencing decreases were fruit and vegetables (-0.6%) and dairy and related products (-0.3%). Cereals and bakery products were flat.
All six food-at-home food groups remained up in December on an annual basis (unadjusted). The steepest 12-month price hikes came from cereals and bakery products (+16.1%), dairy and related products (+15.3%), other food at home (+13.9%) and nonalcoholic beverages (+12.6%). Those percentages compared with +8.4% for fruit and vegetables and +7.7% for meat, poultry, fish and eggs.
Shortages of eggs at supermarkets and other grocery retailers remain in the headlines, and that’s reflected in December’s CPI for the segment. Egg prices were up by 59.9% year over year (unadjusted) and by 11.1% month to month (adjusted).
Meanwhile, the food-away-from-home index again held firm on a monthly basis in December, up 0.4% on a monthly basis versus a 0.5% increase in November, according to BLS. The 12-month gain for food-away-from-home was 8.3% in December, down from 8.5% in November and following an uptick in October.
“The latest CPI data serve as encouraging end cap on an otherwise turbulent year,” Andy Harig, vice president of tax, trade, sustainability and policy development at FMI-The Food Industry Association, said in an emailed comment. “As inflation slows, economists remain cautiously optimistic about the potential for a soft landing for the U.S. economy.”
Excluding food and energy, the December CPI rose by 5.7% from a year ago and by 0.3% from a month ago, about the same as increases of 6% year over year and 0.2% month to month in November, BLS reported.
Energy costs have declined but remain a key factor behind elevated inflation, up 7.3% year over year (unadjusted) and down 4.5% month to month in December, compared with an annual gain of 13.1% and a monthly decline of 1.6% in November. Gas and fuel oil prices fell 9.4% and 16.6% month over month, respectively, in December versus a decrease of 2% for gas and a gain of 1.7% for fuel oil in November. On an annual basis, gas prices were down 1.5% and fuel oil prices up 41.5% for December, compared with yearly increases of 10.1% for gas and 65.7% for fuel oil in November.
“The December CPI data reflect that the global food market remains tight. In 2022, we witnessed energy prices become increasingly volatile, creating uncertainty for one of the industry’s most critical input costs. We also continue to monitor severe weather events, trucking and labor, which serve as key influencers on inflation,” Harig noted. “We’re optimistic that there’s beginning to be light at the end of the tunnel. The food industry is working hard to advance initiatives that save time, money and resources in getting fresh, safe and healthy food to the tables of consumers at price points they can afford.”
In its December inflation report, consumer market data specialist Numerator noted that shoppers are reining in purchases across the retail spectrum, including food, with the cutbacks larger among lower- and middle-income households.
Unit sales for various categories in the grocery sector show that lower-income consumers (annual household income below $40,000) have scaled back purchase quantities by 7.9% from a year ago, while middle-income consumers ($40,000 to $80,000 in annual household income) have reduced quantities by 10.5%, according to Numerator’s December data. In contrast, higher-income consumers (over $80,000 in annual household income) have cut purchase quantities by just 1.3%. Product categories experiencing the most consumer cutbacks are higher-cost items such as fresh meal kits, frozen foods and meat. Lower-cost foods and daily essentials like bread, dairy, produce, and pasta and noodles have seen fewer purchase cutbacks by shoppers.
*Editor's Note: Article updated with Numerator research.