Dive Brief:
- Food-at-home prices rose at an annual rate of 2.7% in August — the fastest pace of grocery inflation in two years — according to Consumer Price Index statistics published Thursday by the U.S. Bureau of Labor Statistics.
- Overall inflation increased to 2.9%, the highest level since January.
- Grocery inflation has been trending upward since falling to a multiyear low of less than 1% in August 2024.
Dive Insight:
Grocery inflation was up by more than half a percentage point in August compared with the prior month, a reversal from the slight month-to-month decline recorded in July. The closely watched measure of food affordability is now at its highest rate since August 2023, when it came in at 3%.
Meat prices played an outsized role in driving up grocery inflation last month, with consumers facing especially large increases in the cost of beef, the BLS reported. Prices increased 16.6% for steak in August compared with the same period last year, and were up 13.6% for beef roasts and nearly 13% for ground beef. Pork prices rose at a 1.2% annual clip in August, but costs for ham and pork chops were down.
Egg prices were up about 11% year over year last month, although costs for that food have moderated in recent months. Coffee prices, meanwhile, surged by almost 21%, reflecting recently imposed tariffs on imports from countries that produce the commodity.
Consumers have also been dealing with higher costs for many fresh fruits and vegetables. The cost of apples rose at an annual clip of almost 10% in August, while banana prices were up 6.6% and the cost of oranges moved up by over 5%. In addition, lettuce prices gained almost 4% and potato prices rose by more than 2%. On the other hand, frozen vegetable prices were off by 2.5%.
Grocers have been taking steps to hold down the price of food as they work to satisfy shoppers. Speaking during a quarterly earnings call last week, Kroger CFO David Kennerley said the company is focused on keeping costs “as low as possible for our customers.”
Food prices have been ascending as inflation gains steam across the board. Factors pushing up inflation include increases in the cost of goods and services like used cars, insurance, airline fares and furniture, according to the BLS.
