Grocery & CPG

Grocery Prices Flat in August as Lettuce Leads Produce Decline

Grocery prices were flat in August as lettuce prices fell 6.2%, while food-at-home inflation held at 2.2% for the year, well below the 3.4% overall CPI increase.

Grocery Prices Flat in August as Lettuce Leads Produce Decline
Grocery Prices Flat in August as Lettuce Leads Produce Declinesylvar / Openverse

Grocery prices held steady from July to August, the U.S. Bureau of Labor Statistics reported Friday, even as the overall Consumer Price Index for all goods rose 0.4%.

For the 12-month period through August, food-at-home inflation ran at 2.2%, well below the 3.4% increase in the overall CPI, which the Bureau attributed largely to rising energy costs.

Falling produce prices did most of the work in holding the grocery index flat. The lettuce index dropped 6.2% in August, on top of a 16.4% decline in July. Lettuce demand fell sharply after a cyclosporiasis outbreak earlier this summer. The lettuce slide helped pull the fresh fruits and vegetables index down 0.7% for the month.

Most other major grocery categories posted small increases in August. The egg index rose 2.9% on a seasonally adjusted basis, driving a 0.1% gain for the combined meat, poultry, fish and eggs category. Dairy and related products climbed 0.3%, nonalcoholic beverages rose 0.2%, and other food at home edged up 0.1%. Cereals and bakery products were flat.

Beef remained the standout on a yearly basis. The beef and veal index was up 5.9% over the 12 months through August. Uncooked ground beef rose 7.2%, and uncooked beef roasts jumped 8.4% compared with year-ago levels.

Fish and seafood prices also stayed elevated, with the category index up 6.5% year over year. Fresh fish and seafood rose 6.3%, while frozen fish and seafood climbed 8.2%.

Food away from home told a different story. That index rose 0.3% in August and 3.4% for the past 12 months, driven primarily by increases at full-service restaurants — putting restaurant inflation a full 1.2 percentage points above grocery inflation on an annual basis.

Energy carried the broader CPI increase. The fuel oil index jumped 10.1% in August and stood 52% above year-ago levels. Motor fuel rose 4.1% for the month and 27.9% for the 12-month span. Airline fares gained 2.7% in August and 23.4% over the year. Other categories contributing to ongoing inflation included recreation (up 2.7%), medical care (up 1.6%) and personal care (up 3.6%).

For grocery marketers, the takeaway is a widening price gap in consumers' favor at the supermarket: with at-home food inflation at 2.2% versus 3.4% for eating out, retail grocery continues to hold a relative value position — unless beef and seafood costs keep climbing.

Source: Supermarket News

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Nathan Brooks

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Market editor covering consumer brands and retail at Target Marketing.

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