The Consumer Price Index (CPI) for November, as unveiled by the Bureau of Labor Statistics on Tuesday, indicated a 1.7% surge in grocery prices from the corresponding period last year. This represents a marginal slowdown from the 2.1% escalation noted in October and the 2.4% uptick observed in September. Economist Steve Reed, affiliated with the Bureau of Labor Statistics, underscored the persisting deceleration but highlighted that the general price trend remains on an upward trajectory, refuting any suggestion of widespread price declines.
Reed noted that the 1.7% surge in grocery prices aligns with pre-2020 patterns, indicating a semblance of consistency in the market. Tracking selected items, the Bureau of Labor Statistics observed that the average cost of essential grocery items is higher than pre-pandemic levels but slightly lower than the corresponding period in the previous year.
Breaking down the data, November saw year-over-year price increases in five out of six major grocery food categories. Notable upticks included cereals and bakery products (3.4%), nonalcoholic beverages and beverage materials (2.9%), and fruits and vegetables (0.4%). However, dairy and related products experienced a 1.4% decrease, primarily driven by lower fresh whole milk prices (down 2.9%) and a 2.6% decline in cheese prices.
Egg prices registered a significant year-over-year decrease of 22.3%, contributing to a month-over-month dip of 0.5% in grocery prices from October. Pork prices also decreased by 0.5% year-over-year. Reed explained that the volatility in egg and pork prices is not surprising, as these categories have historically exhibited fluctuating trends.
The average price for a dozen large Grade A eggs currently stands at $2.14, compared to $1.14 pre-pandemic and $3.59 last year. Reed cautioned against reading too much into month-over-month changes, highlighting their inherent unpredictability.
On an unadjusted basis, November witnessed a 0.5% drop in grocery prices compared to October. However, when seasonally adjusted, prices increased by 0.1%. Notable month-over-month changes included a 4.3% jump in butter prices, the largest monthly increase since June 2022, and a 4.6% increase in potatoes, the most substantial seasonally adjusted hike since July 2013.
In terms of dining out, November saw a 5.3% year-over-year increase in costs and a 0.4% uptick compared to the previous month. Reed explained that while grocery prices are influenced by supply chain dynamics, climate issues, and unexpected events like the avian flu, dining-out prices are less volatile and primarily driven by factors such as wage costs and demand.
Looking ahead, experts anticipate continued volatility in the food market. Andrew Charles, Managing Director at TD Cowen, noted that beef prices are likely to be inflationary in the coming year, while chicken prices, considered a commodity, are expected to remain relatively stable. This forecast aligns with recent developments, such as McDonald’s announcement of its plans to expand its chicken offerings, including the McCrispy sandwich, into wraps and tenders by the end of 2025, reflecting the growing competitiveness of the chicken business compared to beef.
Source: Yahoo Finance
