April brings another breather in grocery price inflation

Grocery prices again fell on a month-to-month basis in April amid downticks in food inflation and the overall Consumer Price Index (CPI).

The April CPI for All Urban Consumers edged up 4.9% (unadjusted) over the previous 12 months, down from a 5.0% uptick in March, the U.S. Bureau of Labor Statistics (BLS) reported Wednesday. That represented the 10th consecutive month of year-over-year declines in the CPI and the lowest annual gain since April 2021, according to BLS.

During the past year, the CPI saw 12-month growth of 6.0% for February, 6.4% for January and then in 2022 of 6.5% for December, 7.1% for November, 7.7% for October, 8.2% for September, 8.3% for August, 8.5% for July, 9.1% for June, 8.6% for May and 8.3% for April.

Sequentially, the April CPI rose 0.4% (seasonally adjusted), up from 0.1% in March. Monthly growth in the CPI over the past 12 months has been up and down but remained below 1% since last summer, coming in at 0.4% in February, 0.5% in January and in 2022 at 0.1% in December, 0.2% in November, 0.5% in October, 0.4% in September, 0.2% in August, flat in July, 1.3% in June, 1% in May and 0.3% in April.

Though not as big of a decrease as in March, April continued a downtrend in food prices. The food-at-home index dipped 0.2% month over month for April following a 0.3% decrease in March—the first decline since September 2020, BLS reported.

Monthly increases in the food-at-home index have stayed below 1% since a 0.8% uptick in August, followed by gains of 0.7% in September, 0.5% in October, 0.6% in November and 0.5% in December of last year and 0.4% in January and 0.3% in February of 2023. That compared with increases of 1.3% in July, 1% in June, 1.4% in May and 0.9% in April of 2022.

Year over year, the food-at-home CPI was up 7.1% in April, continuing sizable drops this year from 8.4% in March, 10.2% in February and 11.3% in January. Those numbers extended a downtrend trend from 11.8% in December, 12% in November, 12.4% in October, 13% in September and 13.5% in August. The end-of-summer months had marked the end of rising 12-month growth since the start of 2022, as the food-at-home index climbed 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.

Kroger’s chief gives positive forecast

“It’s consistent with what we were expecting,” Kroger Chairman and CEO Rodney McMullen told Good Morning America host George Stephanopoulos in a video segment on Wednesday morning (see above). “If you look over the last year or so, we’ve been telling people we expect that, as you get further during the year, the inflation will continue to decline year on year. It doesn’t meant that it will go down a lot, but the rate of increases will slow down.”

McMullen cited eggs and meat, including beef and chicken, as some of the product categories experiencing price decreases, adding that it’s a “good time of the year for meat to start coming down a little bit, as you’re moving into the grilling season.”

Four of the six major grocery store food group indices for food-at-home fell on a monthly basis (adjusted) in April, including dairy and related products (-0.7%); fruit and vegetables (-0.5%); meat, poultry, fish and eggs (-0.3%); and non-alcoholic beverages (-0.1%), according to BLS. Cereals, bakery products and "other" food-at-home saw slight price growth, at a rate of 0.2%.

All six food-at-home group indices were up in April on an annual basis (unadjusted), including two by double digits—cereals and bakery at 12.4% and "other" food-at-home at 10.4%. The other 12-month gains were led by nonalcoholic beverages ( 9.5%), followed by dairy and related products ( 8.0%); meat, poultry, fish and eggs ( 2.8%) and fruit and vegetables ( 2.0%).

The high price of eggs has been an inflation barometer for many consumers, and pricing in this category continues to drop. In April, egg prices declined 1.5% month to month following sequential decreases of 10.9% in March and 6.7% in February. Compared with a year earlier, eggs pricing was up 21.4% for April, down from 36% for March and 55.4% for February.

Downward trend in food

The overall food CPI—including food-at-home and food-away-from-home—posted 7.7% 12-month growth in April, continuing declines this year from 8.5% in March, 9.5% in February and 10.1% in January. Those numbers followed a steady decrease in 2022 from 10.4% in December, 10.6% in November, 10.9% in October, 11.2% in September and 11.4% in August.

As in March, the April food index came in flat on a monthly basis, down from upticks of 0.4% in February and 0.5% in January and following a decline to 0.3% sequential growth in December, BLS data show. The food CPI remains down from monthly gains of 0.5% in November, 0.6% in October, and 0.8% in September and August and hasn’t hit the 1% mark since growth of 1.1% in July.

On the foodservice front, the April food-away-from-home index gained 8.6% year over year versus 8.8% in March, 8.4% in February and 8.2% in January. Food-away-from-home was up 0.4% month to month for April, down from 0.6% in March, February and January.

“The April CPI report shows promising progress for shoppers, as inflation—and subsequently grocery prices—continue its steady, albeit slow, decline,” Andy Harig, vice president of tax, trade, sustainability and policy development at FMI-The Food Industry Association, said in a statement on Wednesday. “Following recent price declines in the volatile commodities of meat, poultry, eggs and fish, we are seeing that while prices for food at home fall slowly, we are still headed in the right direction.”

Source: U.S. Bureau of Labor Statistics

Consumers adapt to higher costs

Excluding food and energy, the March CPI rose 5.5% from a year earlier and 0.4% from a month earlier, about the same as upticks of 5.6% year over year and 0.4% month to month in March, BLS said.

Gasoline and fuel oil costs have relaxed. For April, gas prices climbed 3.0% month over month (adjusted) but were down 12.2% (unadjusted) year over year, compared with a 4.6% decrease on a monthly basis and a 17.4% decrease annually for March. Fuel oil pricing in April fell 4.5% from the previous month and 20.2% from a year ago, versus declines of 4% monthly and 14.2% annually in March.

Kroger’s McMullen explained on Good Morning America that food shoppers have adjusted to higher prices by cooking at home more often, purchasing store brands and buying larger package sizes that are cheaper per ounce.

“You can cook at home for one-fourth to one-third the cost of going out [to eat],” he said.

When Stephanopoulos asked about savings tips for consumers, McMullen mentioned looking at the weekly grocery ads, signing up for the loyalty program and taking advantage of personalized offers, fuel rewards and gift cards with rewards.

“Just look at every single opportunity there is to save a little bit of money,” the Kroger CEO said.

FMI’s Harig noted that grocers and the food industry are serving up more ways to funnel savings to shoppers.

“FMI is working alongside retailers to communicate consumer needs as we continue to battle inflationary food prices,” he stated. “For example, FMI’s most recent survey found that in order to minimize the effects of higher food prices, consumers are looking for deals across multiple channels—diversifying their grocery purchases between supermarkets, mass retailers, club stores and online. As inflation eases and the economic landscape continues to evolve, retailers will continue to use every available tool to help keep food costs low for consumers.”