Food Inflation Proves Sticky, Again
Inflation remains stubborn. The latest government data shows that the overall Consumer Price Index rose 0.6% in August, up from a 0.2% lift the previous month. Although the uptick was attributed mostly to fuel and shelter, the food index climbed again, too.
Consumers’ resilience and grocers’ efforts to provide competitive pricing are likely to continue, as prices remain elevated. According to fresh data from the U.S. Bureau of Labor Statistics (BLS), the overall food index inched up 0.2% in August, as did the food-at-home index.
[Read more: “Holiday Retail Sales Growth Predicted to Be Sluggish”]
Within the grocery sector, inflation results were mixed. Prices for meats, poultry, fish and eggs climbed 0.8% last month, fueled by a 2.2% increase in pork. The CPI for cereals and bakery also edged higher by 0.5%.
Some categories trended down during the last full month of summer. The index for dairy and related products dropped 0.4% in August after rising 0.5% in July. There was a slight 0.2% dip in fruits and vegetables and in nonalcoholic beverages.
On a year-over-year (YoY) basis, grocery inflation is up 3%, off the record-breaking double digit highs of last year but still above norms.
Grocery inflation remains cooler than foodservice inflation, where the CPI is 6.5% higher in a YoY comparison. Prices for food away from home increased 0.3% in August.
The new CPI numbers underscore the still-tenuous retail environment and overall marketplace. On Sept. 7, National Retail Federation Chief Economist Jack Kleinhenz described the economy as slowing but not halting. “Progress has been made on combating inflation, but higher prices remain,” he summed up. “While consumers are still spending, the composition of their spending continues to favor services over retail goods and even then, there was less momentum going into the third quarter.”
With inflation coming in higher than expected in August, all eyes are now on the Federal Reserve, meeting on Sept. 19 and 20 to discuss a possible rate hike.
