Grocery pricing retreats in March

For the first time in nearly three years, grocery prices in March fell from the previous month as the Consumer Price Index (CPI) continued a downward trend.

The March CPI for All Urban Consumers rose 5.0% (unadjusted), down from a 12-month gain of 6.0% in February, the U.S. Bureau of Labor Statistics (BLS) reported Tuesday. That marked the ninth straight month of year-over-year decreases in the CPI and, according to BLS, the lowest 12-month increase since May 2021.

Over the past year, the CPI saw annual growth of 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, 8.3% for April and 8.5% for March.

On a month-to-month basis, the March CPI inched up 0.1% (seasonally adjusted), down from 0.4% in February, which marked a decline from 0.5% in January. Sequential growth in the CPI during the past 12 months, though up and down, has essentially stayed below 1% since last summer, ending up at 0.1% in December, 0.2% in November, 0.5% in October and 0.4% in September, 0.2% in August, flat in July, 1.3% in June, 1% in May, 0.3% in April and 1.2% in March 2022.

Financial markets, concerned about recessionary signals, have been watching inflation levels closely for signs that the Federal Reserve’s interest rate adjustments are achieving their aim to help slow the economy. To that end, the March CPI report should provide welcome news of noticeable price relief to consumers and businesses, and potentially of a longer-term decline in inflation.

A downtrend has continued in food, with a significant change in March. Sequentially, the food-at-home index fell 0.3% for March—the first decline since September 2020—after 0.3% growth for February, BLS reported.

Monthly gains in the food-at-home index have remained below 1% since a 0.8% hike in August, followed by 0.7% in September, 0.5% uptick in October, 0.6% in November and 0.5% in December of last year and 0.4% in January 2023. That compared with upticks of 1.3% in July, 1% in June, 1.4% in May, 0.9% in April and 1.5% in March 2022.

For March, the food-at-home CPI was up 8.4% year over year, dropping from 10.2% in February. Grocery inflation continues to ease despite still-elevated levels, with the food-at-home index recording annual gains of 11.3% in January, 11.8% in December, 12% in November, 12.4% in October, 13% in September and 13.5% in August. The end-of-summer months represented the end of increasing 12-month growth since the start of 2022, as the food-at-home CPI 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.

In a positive sign for consumers, half of the March CPI's six food-at-home group indices declined, including proteins, produce and dairy. / Photo: Shutterstock

Three of the six major grocery store food group indices for food-at-home fell on a monthly basis (adjusted) in March, including meat, poultry, fish and eggs (-1.4%); fruit and vegetables (-1.3%); and dairy and related products (-0.1%). Increases were led by cereals and bakery products ( 0.6%), followed by other food-at-home ( 0.4%) and nonalcoholic beverages ( 0.2%).

All six food-at-home group indices were up for March on an annual basis (unadjusted), with four elevated by double digits. Cereals and bakery again had the highest 12-month price hike ( 13.6%), followed by nonalcoholic beverages ( 11.3%) other food-at-home ( 11.1%), dairy and related products ( 10.7%). Single-digit increases were seen in the meat, poultry, fish and eggs ( 4.3%) and fruit and vegetables ( 2.5%) indices.

Consumers are still grappling with high prices for eggs, but inflation in the category continues to fall. In March, egg pricing fell 10.9% from February, when inflation in segment declined 6.7%. Compared with a year ago, eggs prices were up 36% for March, down from year-over-year gains of 55.4% for February and 70.1% for January.

On the flip side, the March food-away-from-home index rose 8.8% on a yearly basis, a gain from 8.4% in February, 8.2% in January and 8.3% in December. Food-away-from-home was up 0.6% month to month in March—the same as in February and January—compared with 0.4% in December.

Overall, the food CPI—including food-at-home and food-away-from-home—had 8.5% annual growth in March, down from 9.5% in February. The latter decline represented the first time that year-over-year food inflation was below double digits since April 2022 and continued a steady decrease from 10.1% in January, 10.4% in December, 10.6% in November, 10.9% in October, 11.2% in September and 11.4% in August. Those numbers followed a steady rise to 10.9% in July, 10.4% in June, 10.1% in May, 9.4% in April and 8.8% in March 2022.

The food index came in flat on a monthly basis for March, down from upticks of 0.4% in February and 0.5% in January and following a decline to 0.3% sequential growth in December, according to BLS data. The food CPI remains down from monthly increases of 0.5% in November, 0.6% in October, 0.8% in September and August, 1.1% in July, 1% in June, 1.2% in May, 0.9% in April, and 1% in March 2022.

Excluding food and energy, the March CPI advanced 5.6% from a year earlier and 0.4% from a month earlier, about the same as increases of 5.5% year over year and 0.5% month to month in February, BLS said.

Gasoline and fuel oil costs have let up. For March, gas prices were down 4.6% month over month (adjusted) and 17.4% (unadjusted) year over year, versus a 1% gain on a monthly basis and a 1.5% decrease annually for February. Fuel oil pricing in March was down by 4% from the previous month and by 14.2% from a year ago, compared with a 7.9% monthly decrease and 9.2% 12-month gain in February.

In its gauge of pricing levels for everyday consumer purchases, market data specialist Numerator pegged March inflation as rising 0.3% on a monthly basis (seasonally adjusted) and 7.5% annually (unadjusted), both higher than the CPI measure. Food-at-home prices as measured by Numerator gained 0.1% month over month (higher than the CPI) and 8.0% year over year (lower than the CPI).

Among retail channels over the four weeks through March 5, Numerator’s latest Inflation Price Pulse tracker had grocery prices as highest for dollar stores ( 16.3% year over year), followed by mass merchants ( 11.7%), grocery stores ( 8.6%), online ( 7.5%) and warehouse clubs ( 5.8%).

*Editor's Note: Article updated with more March CPI data and Numerator data.