Food prices have remained a hot topic among consumers and politicians — yet grocery inflation has decelerated in recent months, according to government data.
Grocery inflation reached a multi-decade high during the pandemic with a 13.5% year-over-year increase in August 2022 after steadily rising each month after May 2021. Two years later, the food-at-home rate has plummeted and now hovers close to where it was prior to the COVID-19 pandemic.
Since December, the annual rate of food-at-home prices has held steady at about 1%. In September, the rate came in at 1.3%, according to Consumer Price Index data by the U.S. Bureau of Labor Statistics.
In February 2022, the annual food-at-home rate surpassed the rate of overall inflation and continued to do so until it flipped in August 2023. Meanwhile, the overall rate of inflation slowed from its high of 9.1% in June 2022, hitting 2.4% last month — its slowest growth since February 2021.
To help industry stakeholders better understand inflation's impact at a crucial time, Grocery Dive has developed several charts that show the progress along key metrics and show how grocery inflation stacks against restaurant price increases.
Both grocery and inflation have calmed in 2024, nearing pre-pandemic levels
A closer look at grocery prices
Two years ago, the food-at-home annual rate greatly outpaced the rate of food-away-from-home prices, which was just above the rate of overall inflation in September 2022.
Fast forward to last month and the opposite is true: food-at-home prices are lower than overall inflation while food-away-from-home prices are higher.
Food prices in 2022 rose due to the avian influenza outbreak, which impacted egg and poultry prices, and the war in Ukraine, which impacted economy-wide inflationary pressures like high energy costs, the USDA Economic Research Service found.
Food price growth slowed in 2023 as economy-wide inflationary pressures, supply chain issues and wholesale food prices subsided. Prices increased for all food categories except for pork, but at a slower pace than the year prior, the ERS found.
“Food prices have historically been a little slower to stabilize,” Steve Markenson, vice president of research and insights at FMI – The Food Industry Association, said during a media briefing earlier this month. “Compared to other sectors, as some economists will describe it, they shoot up like rockets and they kind of come down like feathers.”
The ERS predicts that in 2024 prices for most food categories will change at a rate below their 20-year historical average. The ERS also forecasts that prices will decrease for three food-at-home categories, including fish and seafood, and increase for 12, including fresh vegetables, cereals and poultry.
Stacking up against restaurants
Despite ongoing concern about the cost of items in supermarket aisles, grocery prices have fared better than restaurant prices since April 2023, when the annual rate of food-away-from-home surpassed that of food-at-home.
The ERS forecasts that food-at-home prices will increase 1.1% in 2024 while food-away-from-home prices will increase 4.1%. For 2025, they are expected to increase 0.8% and 3.1%, respectively.
Grocery inflation remains lower than the annual food-away-from-home rate
Grocers have looked to capitalize on their pricing advantage over restaurants, from serving up more ready-made and made-to-order offerings in their grocery aisles to opening their own in-store restaurants.
Ongoing consumer pricing concerns
Despite the months-long pullback in food-at-home prices and overall inflation, consumers have remained worried about how much they are spending at supermarkets.
A recent survey by 84.51°, the grocer’s retail analytics unit, found that 62% of households in October are extremely concerned about inflation — only slightly down from the 65% who said the same in October 2023.
As inflation slows, consumer worries fluctuate about prices
Twenty-one percent said they are not comfortable at all with their finances, 4 percentage points down from the 25% who said so a year ago, the research firm found. Among consumers uncomfortable with their finances, 84% cited grocery prices as their top concern followed by monthly bills (80%).
Consumers have turned to a variety of tactics to save money on their grocery bills, from coupon clipping to trading down to lower-priced private brands. A separate 84.51° survey found that 46% of surveyed consumers in the second quarter of 2024 reported cooking from scratch or with pre-prepared foods in an effort to save money, up from the 38% who said they did the same last year.
Shoppers are continuing to spend more on groceries than pre-pandemic. The average weekly grocery spending per household was $163 in July and August, up nearly $50 from the average weekly spend of $114 in 2019, according to research from FMI.
The current average grocery spend is consistent with the rate of food inflation, Markenson of FMI said.
“Over the past four years we've had a 25% increase in food-at-home prices,” he said, noting that average wage increases of 33%, though, are outpacing grocery inflation.
Consumer perceptions of inflation “don't always line up with realities,” Markenson said. “You [have] got to keep in mind consumers’ feelings.”
