Grocery prices hold downward course in May
The latest Consumer Price Index showed that inflation continued to slow from year-ago levels, but there remained a significant gap between grocery and restaurant price increases.
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May brought a monthly uptick in grocery pricing but maintained a year-over-year downward trend in inflation, reflecting an ongoing relaxation in the Consumer Price Index (CPI).
The May CPI for All Urban Consumers rose 4.0% (unadjusted) over the previous 12 months, down from a 4.9% uptick in April, the U.S. Bureau of Labor Statistics (BLS) reported Tuesday. That represented the 11th straight month of annual decreases in the CPI and the smallest yearly gain since March 2021, according to BLS.
Rounding out the 12-month period, the CPI grew 5.0% year over year for March, 6.0% for February, 6.4% for January and then, in 2022, was up 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 and 8.6% for May.
On a monthly basis, the May CPI ticked up 0.1% (seasonally adjusted), compared with a 0.4% rise in April. Sequential growth in the CPI has stayed below 1% since last summer, finishing at 0.1% in March, 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 and flat in July, following upticks of 1.3% in June and 1% in May.
Source: U.S. Bureau of Labor Statistics
Food-at-home prices down noticeably vs. last year
As with the overall CPI, grocery price inflation in May came in at about half of its year-ago level.
The food-at-home index was up 5.8% year over year in May, extending sizable drops so far in 2023 from 7.1% in April, 8.4% in March, 10.2% in February and 11.3% in January.
Those figures continued a slide 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 signaled the end of rising 12-month growth for the food-at-home CPI since the start of 2022, including 13.1% for July, 12.2% for June and 11.9% for May.
Month to month, food-at-home inflation inched up 0.1% in May after decreases of 0.2% in April and 0.3% in March, with the latter marking the first decline since September 2020, according to BLS.
Still, monthly gains in the food-at-home index have held below 1% since a 0.8% uptick in August, which was followed by increases 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. The current figure remains a far cry from sequential growth of 1.4% in May 2022.
“The May CPI report reveals grocery prices continue to level off, with food price inflation relatively flat since February and significantly lower than the July 2022 peak,” Andy Harig, vice president of tax, trade, sustainability and policy development at FMI-The Food Industry Association, said in a statement on Tuesday. “Particularly heartening is the number of items in grocery store aisles with declining prices, including eggs, cereals, meat and dairy.”
Two of the six major grocery store food group indices for food-at-home fell on a monthly basis (adjusted) in May and saw bigger declines than in April, including meat, poultry, fish and eggs (-1.2%) and dairy and related products (-1.1%). Cereals and bakery products were flat, while non-alcoholic beverages and “other” food-at-home grew 0.7% and 0.4%, respectively, BLS reported. Fruit and vegetable pricing was up 1.3% sequentially after a decrease in the previous month.
On an annual basis (unadjusted), all six food-at-home group indices were up for May, but five—excluding fruit and vegetables—experienced smaller increases than for April. Cereals and bakery was the only category with double-digit growth, up 10.7% year over year. That was followed by “other” food-at-home ( 9.2%); nonalcoholic beverages ( 8.7%); dairy and related products ( 4.6%); fruit and vegetables ( 2.7%); and meat, poultry, fish and eggs ( 0.3%).
In a sign that food inflation is stabilizing, egg prices continue to fall. In May, the price of eggs declined 13.8% (adjusted) month over month after sequential decreases of 1.5% in April, 10.9% in March and 6.7% in February. Compared with a year earlier, egg pricing dipped 0.4% (unadjusted) for May following yearly gains of 21.4% for April, 36% for March and 55.4% for February.
Source: U.S. Bureau of Labor Statistics
Restaurant price inflation remains stubborn
The overall food CPI—including food-at-home and food-away-from-home—saw 6.7% 12-month growth in May, down from 7.7% in April, 8.5% in March, 9.5% in February and 10.1% in January. Those numbers followed a steady decline in 2022 from 10.4% in December, 10.6% in November, 10.9% in October, 11.2% in September and 11.4% in August.
May’s food index showed a 0.2% month-to-month uptick following zero growth in April and March and gains of 0.4% in February and 0.5% in January, BLS said. The food CPI hasn’t hit the 1% growth mark since rising 1.1% in July 2022.
Elevated inflation has lingered in foodservice. The May food-away-from-home index rose 8.3% year over year versus increases of 8.6% in April, 8.8% in March, 8.4% in February and 8.2% in January. Food-away-from-home edged up 0.5% month over month for May, in line with gains of 0.4% for April and 0.6% for March, February and January.
“We understand from our U.S. Grocery Shopper Trends research that consumers remain concerned about prices at the grocery store,” Harig noted. “The cost of food can be impacted by a number of factors—including unexpected events—but we remain optimistic that food inflation will continue to moderate throughout 2023.”
Grocery inflation highest at dollar, mass retailers
Backing out food and energy, the May CPI climbed 5.3% from a year earlier and 0.4% from a month earlier, roughly the same as increases of 5.5% year over year and 0.4% month to month in April, BLS reported.
Gasoline and fuel oil prices continue to ease off. In May, gas prices fell by 5.6% month over month (adjusted) and by 19.7% (unadjusted) year over year, compared with a 3% increase on a monthly basis and a 12.2% decrease annually for April. Fuel oil pricing in May was down 7.7% sequentially and 37% from a year ago, versus declines of 4.5% monthly and 20.2% annually in April.
By retail channel, dollar stores continue to experience the highest grocery price inflation, according to Numerator’s latest Inflation Price Pulse tracker. The market data specialist reported that, for the four weeks ended April 30, grocery pricing was up 9.7% year over year for dollar stores and 8.6% for mass merchants, well above inflation growth at supermarkets ( 6.1%), warehouse clubs ( 3.7) and online (-0.3%) during that period.
“While we are heading in the right direction, grocers still face headwinds in terms of labor shortages and transportation challenges, and we anticipate that prices will likely remain above pre-pandemic levels for much of the year,” FMI’s Harig commented. “FMI and the food industry are working together on ways to meet the needs of grocery shoppers, including offering private-brand products, investing in technology and facilitating trading partner collaboration to help take the stress off the primary sources of supply.”