A flat Consumer Price Index (CPI) for October didn’t prevent grocery prices from ticking back up sequentially after two months of declines, even as food-at-home inflation continued its annual downtrend.
The October CPI for All Urban Consumers came in at 0.0% (seasonally adjusted) month over month, compared with a 0.4% uptick in September, the U.S. Bureau of Labor Statistics (BLS) reported Tuesday. Monthly growth in the CPI has stayed below 1% since the summer of 2022, with sequential results over the past year coming in at 0.6% in August, 0.2% in both July and June, 0.1% in May, 0.4% in April, 0.1% in March, 0.4% in February, 0.5% in January and, in 2022, at 0.1% in December, 0.2% in November and 0.5% in October.
Year over year, October’s CPI rose 3.2%, down from 3.7% (unadjusted) in September and August. The September-August levels had capped off two months of yearly increases in inflation after 12 months of annual declines, according to BLS data.
For the rest of the 12-month period, the CPI gained 3.2% year over year for July, 3% for June, 4% for May, 4.9% for April, 5% for March, 6% for February, 6.4% for January and, in 2022, was up 6.5% for December, 7.1% for November, 7.7% for October and 8.2% for September.
Erik Lundh, principal economist at business think tank The Conference Board, noted that overall inflation remains well below the peak of 9.1% in mid-2022 and core CPI grew less in October. Excluding food and energy, the October CPI climbed 4.0% from a year ago and 0.2% month over month, dipping from 4.1% year over year and 0.3% month to month in September, BLS reported.
“The Fed will be pleased to see this moderation in price increases, but as Federal Reserve Chair [Jerome] Powell said earlier this month, progress on inflation will be ‘lumpy’ and ‘bumpy,’” Lundh stated Tuesday in a brief on the October CPI data. “At present, our forecast calls for one final 25-basis-point rate increase in December. While these data make that outcome less probable, additional inflation and job reports will be released in the interim. Thus, we are maintaining our forecast until additional data for November are available.”
Blip in grocery inflation
Shelter prices edged up again in October, but receding gasoline prices kept the CPI from rising for the month, according to Lundh, who added that pricing for energy commodities, new vehicles and used cars also were down.
“Meanwhile, food prices rose 0.3% month over month—the largest increase since February 2023, he pointed out.
That includes grocery. The food-at-home CPI grew 0.3% for October, topping upticks of 0.1% in September and 0.2% in August. This index had last seen a 0.3% gain in July, which followed a flat reading for June, a 0.1% rise in May and decreases of 0.2% in April and 0.3% in March—the latter marking the first shrinkage since September 2020, according to BLS.
Monthly growth in the food-at-home CPI has held at below 1% since a 0.8% increase in August 2022. The 2023 calendar year had started with food-at-home growth of 0.4% in January and 0.3% in February.
On an annual basis, food-at-home inflation was up 2.1% in October, continuing receding levels in 2023 from 2.4% in September, 3% in August, 3.6% in July, 4.7% in June, 5.8% in May, 7.1% in April, 8.4% in March, 10.2% in February and 11.3% in January. Those decreases had extended a slide from 13.5% in August 2022.
Still, the monthly uptick in food-at-home inflation exhibits the degree of uncertainty present in the economy, according to Andy Harig, vice president of tax, trade, sustainability and policy development at FMI-The Food Industry Association.
“The October CPI report reminds us that even though inflation has cooled significantly since the highs witnessed in the summer of 2022, the economy continues to provide a few ‘head fakes,’ as Federal Reserve Chairman Powell noted last week,” Harig said in emailed comments on Tuesday.
Of the six major grocery store food group indices for food-at-home, just one experienced a month-to-month decrease: nonalcoholic beverages, down 0.1% (adjusted). Categories seeing monthly increases included meat, poultry, fish and eggs (+0.7); dairy and related products (+0.3%); other food-at-home (+0.3%); and cereals and bakery products (+0.2%). Fruit and vegetables were flat on a monthly basis.
It was a similar story year over year, with just dairy and related products posting a decrease, down 0.4% (unadjusted). The other five segments recording increases, led by cereals and bakery products (+4.2%); other food-at-home (+3.6%); nonalcoholic beverages (+3.3%); fruit and vegetables (+1.1%); and meat, poultry, fish and eggs (+0.4).
“FMI’s 'U.S. Grocery Shopper Trends: Holiday Season' research aligns with the market volatility we’re witnessing, with 42% of consumers saying they are worried about having enough money to pay for food heading into the busy holiday meals season,” Harig explained. “Yet the majority of those shoppers (77%) say they are proactively taking steps to address rising prices during the holidays, with 47% telling FMI they are cooking more or differently. This includes 53% of shoppers who say they plan on eating more at home in the coming year, compared to just 14% who plan to dine out more.”
Longer-term trend remains down for food
Overall, the food CPI—including food-at-home and food-away-from-home—was up 3.3% year over year for October, down from a 3.7% increase for September. Those figures continued steady year-over-year declines from upticks of 4.3% in August, 4.9% in July, 5.7% in June, 6.7% in May, 7.7% in April, 8.5% in March, 9.5% in February and 10.1% in January.
Month to month in October, the food index edged up 0.3% after a readings of 0.2% for September, August and July. That came after upticks of 0.1% in June and 0.2% in May, flat results in April and March, and growth of 0.4% in February and 0.5% in January, BLA data indicated. The food CPI hasn’t reached the 1% growth mark since rising 1.1% in July 2022.
Restaurant and foodservice price inflation continues to fall but somewhat stubbornly. The food-away-from-home CPI was up 0.4% in October, the same as in September and above increases of 0.3% in August and 0.2% in July. Those numbers compared with growth of 0.4% in June, 0.5% in May, 0.4% in April and 0.6% for March, February and January. Year over year, pricing for food-away-from-home rose 5.4% for October, down from 6% for September and continuing a mostly downward trend from 6.5% in August, 7.1% in July, 7.7% in June, 8.3% in May, 8.6% in April, 8.8% in March, 8.4% in February and 8.2% in January.
“While we continue to see progress on the inflation front and anticipate a return to the Fed’s 2% target by the end of 2024, there are numerous risks to this outlook,” The Conference Board’s Lundh wrote in his inflation forecast. “The outbreak of war in the Middle East could result in higher energy prices, as could an intensification of strife in Eastern Europe. A resurgence in inflation associated with these or other events would likely impact monetary policy.”