Food-price inflation rose slightly faster than inflation overall in July, driven by year-over-year increases in cereal and bakery products and nonalcoholic beverages.
The monthly consumer price index for all items was up 3.2% relative to a year ago, and up 3.6% for food at home. On a month-to-month basis, overall prices rose 0.2% in July over June levels, including 0.3% for food at home.
Prices for food away from home (restaurants) were up 7.1% year-over-year but only 0.2% month-to-month.
On a yearly basis, prices for cereal and bakery products were 7% higher than a year ago, and prices for nonalcoholic beverages and beverage materials (including ground coffee and tea bags) were up 5.4%. Prices for “other” food at home were also up 5.4%.
Within cereals and bakery, several sub-categories remained extraordinarily high, including:
- Bread (up 9.5% for the year, led by white bread, up 10.7%)
- Flour and prepared flour mixes (up 8.5%)
- Cookies (up 7.9%)
- Crackers, bread, and cracker products, (up 8.2%)
- Frozen and refrigerated bakery products, pies, tarts, and turnovers (up 8%)
Prices for fruits and vegetables continued to inch up and were 2.9% higher than they were last July. They were led by double-digit year-over-year inflation in frozen fruits and vegetables, at 11.8%, including 17.1% for frozen vegetables.
Dairy and related products, which had seen two consecutive monthly price declines, reversed course and rose 0.5% for July, and were up 1.3% for the full year.
Only meats, poultry, fish, and eggs saw a decline over the past year, with prices down 0.2%. Within those categories, meat and veal prices were mostly higher year-over-year, while pork, poultry, and fish were down slightly, and eggs were down 13.7% compared to last year.
The ongoing war in Ukraine, one of the world’s largest grain producers, along with unusually hot weather around the world and other supply chain disruptions indicate that food inflation could linger, and decline at a slower pace than inflation overall, according to a recent report in the Wall Street Journal.
Matt Pavich, senior director of strategy and innovation at pricing-technology firm Revionics, said shoppers are remaining cautious about their spending and looking for bargains.
“Although prices are no longer increasing at the same rates as they were during peak inflation, consumers are still feeling the impact to their budgets from the lengthy inflationary periods leading from the past couple of years,” he said. “One thing is for sure: While inflation has cooled significantly and the economy appears to be in a stronger position than previously projected, consumers are still looking for ways to stretch their spend and find good deals.”
Lingering inflation is also leading some industry observers to issue cautionary outlooks for the year-end holiday season.
“This back-to-school season already is shaping up to be one where consumers overall spend more, but end up buying less,” said Nikki Baird, formerly with Forrester and PwC and now VP of strategy at tech firm Aptos. “That could easily lead to a similar impact on holiday spending.”
