Inflation declines in June for the 1st time since 2020; grocery prices relatively flat

Grocery prices remained relatively stable in June and continued to increase at a slower pace than restaurant inflation, according to the latest Consumer Price Index report.

The cost of food at home rose 0.1% in June on a monthly basis and 1.1% for the 12-month period. That compares with restaurant price increases of 0.4% and 4.1% on a monthly and yearly basis, respectively. Inflation for food-at-home and food away-from-home combined was up 0.2% in June and 2.2% for the 12-month period.

The overall Consumer Price Index fell 0.1% on a month-to-month basis in June, marking the first decrease since May 2020. Overall inflation was up 3% on a 12-month basis, which was less than expected. The slowdown in inflation heightened expectations that the Federal Reserve would cut interest rates in September, according to reports.

Among food categories, most saw minimal change on a month-to-month basis. The dairy and related products index was up 0.6% percent month-over-month, and the index for fruits and vegetables fell 0.5%. Dairy price inflation was driven by monthly increases in milk (up 0.8%) and ice cream and related products (up 1.4%), and other dairy and related products (up 0.9%).

The index for butter and margarine, up 2.4% monthly, helped drive a 0.5% increase in the “other food at home” category.

Meats, poultry, fish, and eggs rose 0.2% for the month as poultry prices were flat and pork prices were down 0.5%, while beef and veal ticked up 0.1%, seafood rose 0.6%, and egg prices were up 3.5% (up 10.2% on a yearly basis).

Cereal and bakery product prices were basically flat for the month, with prices down 0.1%.

“Today’s CPI numbers once again demonstrate that eating at home is the most cost-effective strategy for American consumers looking to manage their food budgets,” said Andy Harig, VP of tax, trade, sustainability, and policy development at FMI – The Food Industry Association.

“The path to bringing down inflation continues to be somewhat uneven, as certain grocery categories witnessed moderate increases last month,” he said. “But food-at-home continues to run well below the overall and ‘core’ inflation rates.”