The U.S. food inflation rate, on the decline since August 2022, shrank to an annualized rate of 2.7 percent at the end of 2023, said the monthly Consumer Price Index report on Thursday. A Purdue survey said Americans’ expectations of food inflation are the lowest in two years, suggesting consumers are more optimistic about prices this year.
The food inflation rate was the lowest since the 2.4 percent rate in June 2021. Grocery prices rose 1.3 percent and the price of food away from home, which includes restaurant, carry-out, and cafeteria food, grew 5.2 percent in the 12 months ending in December, said the Bureau of Labor Statistics. The economy-wide inflation rate was 3.4 percent, up from the previous 3.1 percent. Higher housing costs accounted for half of the increase in the overall U.S. inflation rate.
“Consumers’ inflation expectation for the next 12 months is the lowest it has been since the inception of the survey (3.5 percent),” said Purdue’s Center for Food Demand Analysis and Sustainability, which began monthly consumer surveys in January 2022. In November, respondents estimated food inflation in the past 12 months at 6.4 percent. Now they estimate it at 5.9 percent.
“A decline in both the consumer food inflation estimate and expectation suggests consumers may be more optimistic as we see food prices increasing much more slowly relative to the high inflation consumers experienced in 2022 and much of 2023,” said Purdue.