The U.S. food inflation rate, on the decline since last fall, has fallen to 4.9%, aided by the second month in a row of modestly lower prices for meat, poultry, fish, and eggs, according to the Biden administration. It was reported to be the lowest food inflation rate since September 2021.
Economy wide, prices increased by 3.2% in the 12 months ending in July, according to the monthly Consumer Price Index report from the Bureau of Labor Statistics.
The CPI report stated that bacon prices were 10.7% lower than a year ago, the largest of declines in pork products that included pork chops, ribs and breakfast sausage. Often volatile, egg prices were down by 13.7% from last July. Whole milk prices were 4.5% lower. But frozen vegetables cost 17.1% more, and margarine prices were up by 11.3%.
The meats, poultry, fish and eggs index declined 0.2% over the year, which is the same decline reported a month ago. The other grocery-store food groups posted increases ranging from 1.3% for dairy and related products to 7% for cereals and bakery products.
Food is the second largest expense for Americans, consuming 13.4 cents of each $1 in consumer spending; housing is the leading expense at 34.7 cents of the dollar.
“To be sure, the high inflation of the past 2+ years has done lots of economic damage,” said Mark Zandi, Chief Economist at Moody’s Analytics, on social media. “Due to the high inflation, the typical household spent $202 more in July than they did a year ago to buy the same goods and services. And they spent $709 more than they did 2 years ago. But the trend lines look good and suggest inflation is set to moderate further.”
The USDA estimates food prices will be an average of 5.8% higher this year than in 2022, and food prices will rise by 2.4% in 2024, in line with the long-term average of a 2.8% increase annually.
EDITOR’S TAKE:
Before we get too excited about these latest statistics, let’s also remember that inflation, no matter how small, is still eating away at the consumer’s purchasing power. Also, if you have been to the gas station recently you were reminded that energy costs are now on the rise again. The figure that is most telling would be the $7,000 average decline in purchasing power for many families during the past two and a half years. Thank goodness the rate of inflation for food appears to be declining. That does offer some hope for the average family and those on fixed incomes. With that in mind – we will once again remind you that while many consumers have pulled back spending for major purchases like housing and auto, farmers/ranchers are in a very solid financial position and they are buying equipment and trucks. Make sure you put them at the top of your prospect list!
