The food price inflation rate edged lower, to 2.6 percent, in January, the third month in a row that food inflation was below 3 percent, said the Consumer Price Index report on Tuesday. The overall U.S. inflation rate was higher than expected at 3.1 percent.
Aided by lower dairy, meat, fish, poultry, and egg prices over the past year at the grocery store, the food inflation rate was the lowest since June 2022. The food-away-from-home sub-index, which includes cafeteria, restaurant, and fast-food meals, was up by 5.1 percent over the past 12 months. Food is the second-largest consumer expense after housing. Shelter, at an annualized 6 percent rate, was the major reason the inflation rate was higher than expected, although lower than the previous month.
The CPI report “was disappointing but doesn’t change the trend of decelerating inflation nor prospects for inflation to return to the Fed’s target by the 2nd half of the year,” said Mark Zandi, chief economist for Moody’s Analytics, on social media.