Key grocery categories are resisting downward inflation trends

Much to the relief of U.S. consumers, grocery price inflation has declined steadily since last summer. But in some popular product segments, pricing remains stubbornly high, according to digital marketing and media firm Catalina.

The Catalina Shopping Basket Index, leveraging real-time insights from the company’s Shopper Intelligence Platform, shows that 10 common food and personal care categories topped the overall inflation rate—at mostly double-digit levels—for the past 12 months through the 2023 first-quarter.

Leading the pack in the United States are yogurt and cereal, whose Q1 2023 inflation rates were up 21% apiece versus Q1 2022. Also seeing double-digit price growth during that time span were soft drinks and water ( 19%), frozen foods ( 17%), hand and bath soaps ( 17%), frozen vegetables ( 16%), coffee ( 16%) and deodorant ( 12%). Inflation was high as well in paper products ( 9%) and soaps and detergents ( 8%).

St. Petersburg, Florida-based Catalina noted that the U.S. inflation rate as of first-quarter 2023 slowed across categories from third-quarter 2022, with product segments fluctuating no more than two percentage points. The Shopping Basket Index for the 10 categories averaged 16% inflation growth compared with 7% for the Q1 2023 Consumer Price Index (CPI) inflation rate for food-at-home.

Year over year, the food-at-home CPI was up 7.1% in April, the U.S. Bureau of Labor Statistics (BLS) reported May 10. That continued sizable drops this year from 8.4% in March, 10.2% in February and 11.3% in January and, going back into 2022, 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 overall April CPI rose 4.9% over the previous 12 months, marking the 10th straight month of year-over-year declines in the CPI and the lowest annual gain since April 2021, according to BLS.

Catalina also tracked high inflation across Europe through the Shopping Basket Index. For the 10 product categories, inflation was up an average of 12% in the United Kingdom, 12% in Italy, 13% in France and 14% in Germany year over year in the 2023 first quarter. In comparison, the Q1 inflation rate for food-at-home was up 7% in the U.K., 5% in France, 5% in Germany and 6% in Italy.

“A number of factors have been driving up prices in Europe and the U.S., including the war in Ukraine, lingering supply-chain disruptions, and rising aluminum, ingredient, labor and energy costs,” Sean Murphy, chief data and analytics officer at Catalina, said in a statement. “In response, we’re seeing CPG marketers and retailers place more emphasis on promotions and price incentives, and we’re working more closely with them to earn the loyalty of value-conscious shoppers with highly personalized offers.”

For all nations surveyed, food prices climbed by an average of 1% in Q1 2023 compared with Q3 2022 but have essentially stabilized in Italy, France and Germany, Catalina said. U.K. food prices have edged up, while in the U.S. food pricing dipped from 7.4% in Q4 2022 to 7.2% in Q1 2023.

Among categories across countries, yogurt saw the biggest annual price gain in Q1 2023, up 18% on average, followed by frozen food ( 17%) and frozen vegetables ( 16%). The largest category price hikes by nation were for cereal in the U.S. ( 21% year over year) and deodorant in Germany ( 27%).

“With the worldwide increase in inflation starting back in mid-2021, our insights about traditionally price-sensitive and value-seeking shoppers apply to even more consumers now,” Murphy added. “We continue to advise our customers that these challenging economic times are an opportunity for brands to fine-tune their omnichannel approach to deliver relevant offers and valuable incentives to help shoppers make the most of their dollars.”