Inflation: Grocery prices spiked during the pandemic but are now moderating
All I want for Christmas... is a lower grocery bill.
If you feel like you've been paying higher prices for a year now at local supermarkets such as Kroger (KR) or Albertsons (ACI), that's because the rate of food inflation has not decreased, only decelerated year over year.
This means it's rising at a slower rate compared to 2022.
Compared to year ago, grocery prices increased 1.7%, according to the Bureau of Labor Statistics' November Consumer Price Index (CPI) released Tuesday. In October, it increased 2.1%, and in September, it jumped 2.4%.
"We see continued deceleration ... we're still up over the year," BLS economist Steve Reed told Yahoo Finance over the phone, adding, "It's not like we're actually seeing broad price declines."
Reed said the 1.7% increase is "sort of consistent with what we typically saw before 2020."
According to selected items that the US Bureau of Labor Statistics tracks in its average price data, the bill for grocery bag basics is higher than pre-pandemic, while slightly lower than this time last year (see below).
In November, 5 out of 6 of the major grocery food categories saw a price increase year over year.
That includes cereals and bakery products (up 3.4%); meats, poultry, fish, and eggs (up 0.1%); nonalcoholic beverages and beverage materials (up 2.9); and fruits and vegetables (up 0.4%).
Dairy and related products dropped 1.4% compared to November of last year, driven by lower fresh whole milk prices, down 2.9%, and cheese, down 2.6%.
Omelettes also got a little cheaper. Egg prices are down 22.3% compared to last year, but up 2.2% compared to October. Pork saw a 0.5% decrease year over year.
Reed wasn't too surprised by the shift, saying that egg and pork prices are "always volatile."
The average price for a dozen large Grade A eggs is currently $2.14, compared to $1.14 pre-pandemic, but $3.59 last year.
Month-over-month changes can be unpredictable, per Reed.
In November, grocery prices dropped 0.5% compared to October on an unadjusted basis, but increased 0.1% when seasonally adjusted.
On a seasonally adjusted basis, butter jumped 4.3%, the largest monthly increase since June 2022. Potatoes saw a 4.6% increase, the biggest seasonally adjusted increase since July 2013.
Another year of chicken sandwiches
The cost of dining out in November is up 5.3% year over year, and up 0.4% compared to the previous month.
Reed said while grocery prices are "more volatile" due to movements in supply chains, climate issues, or sudden outbreaks like the avian flu, prices for dining out are less volatile, mostly driven by factors like "wage costs and demand."
He added, "[Food away from home] didn't quite reach the peak that food at home did, but it also hasn't really decelerated the way the food at home has."
Something to look out for when you hit a fast food joint in 2024 — more offerings around chicken, as beef prices continue to rise.
"We know that beef is likely to be inflationary next year while chicken is a commodity, likely to be more benign, so I think more innovation on the chicken side," Andrew Charles, TD Cowen managing director, told Yahoo Finance Live.
Chicken product tends to return higher margins and the average consumer "skews younger," Charles added.
Inflation-wise, the beef and veal category is up 8.7% year over year, due to a slower-than-expected cattle supply recovery from the impact of the drought. Chicken prices are unchanged compared to a year ago.
McDonald's (MCD) announced last week its plans to bring its chicken sandwich, the McCrispy, to all markets by the end of 2025 and expand it into wraps and tenders as it chicken business is now on par with beef.
Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
Read more about the latest inflation data:
Inflation cools further in November as energy prices fall, housing costs remain sticky
Gas prices fell 6% in November, leading inflation’s cooldown
Inflation: Grocery prices spiked during the pandemic but are now moderating
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