With grocery prices hitting a 43-year high in August, new data offers a conflicting picture of the state of food-at-home inflation
September inflation numbers released early Thursday by the U.S. Bureau of Labor Statistics show grocery price increases have held steady since August, but remain up 13% year over year. The food-at-home index rose 0.7% last month. The Producer Price Index (PPI) increased 0.4% in September from a month earlier, according to numbers released Wednesday by the Bureau of Labor Statistics. The PPI measures the average changes in prices received for final demand products. That's up 8.5% over the same period last year, doubling economists’ expectations with the largest month-to-month increase since May.
Perhaps most startling: Food prices saw a 1.2% monthly increase fueled by a 15.7% surge in the cost of fresh and dry vegetables.
For the CPG industry, key commodities are still higher than overall wholesale prices, as the food PPI rose 10.2% over the last year.
“September showed ongoing cost pressures and the impact of supply chain disruptions from Hurricane Ian, renewed fears of a rail strike and oil prices that have yet to surface in the data,” said Katie Denis, VP of communications and research at Consumer Brands, in a statement Wednesday.
While food and beverage prices remained high for shoppers in September, price inflation slowed for the first time this year in the grocery perimeter departments that account for $200 billion in annual retail sales, new IRI research revealed Wednesday. But that doesn't mean shoppers are flush with cash.
“Overall grocery bills are still significantly higher than this time last year, causing shoppers to shift their purchase habits," Krishnakumar Davey, president of Thought Leadership for CPG and Retail at IRI and NPD said in a statement.
With food and beverage prices elevated—about 13.3% higher year-over-year through the five weeks ending Oct. 2—overall year-over-year inflation was steady from August to September, showing a moderating trend after months of steady increases, IRI reported in its September 2022 Price Check: Tracking Retail Food and Beverage Inflation findings.
Perimeter prices offer some small relief for shoppers’ wallets. Prices in perimeter categories were 9.6% higher in September compared to the year-ago period; however, year-over-year inflation in these categories has declined every month since February, IRI reported.
The flattening of this curve is a welcome change following the surging year-over-year price increases the U.S. has experienced every month from January to July.
Shoppers are finding various strategies to cope during these inflationary times. Quick trips continue to grow the fastest of all trip types over the last 12 weeks, up 5.7% compared to the year-ago period, IRI reported.
Shoppers are also reducing consumption of categories that have seen prices surge. Sales volumes in the deli service lunchmeat, fresh finfish, frozen dinners and shelf-stable dinners categories each declined over 10% in September, IRI reported.
A clearer picture of the inflation situation will likely be revealed Thursday morning, when The Bureau of Labor Statistics’ monthly Consumer Price Index (CPI) report is released.