Food prices rose by a modest 2.2 percent in the past year, and while hamburger and pork chops cost more than they did last July, cheese, rice, and potatoes cost less, said the Labor Department on Wednesday. It was the sixth month in a row of low food inflation, and a Purdue survey indicated that inflation-wary consumers believe food prices are moderating.
The overall U.S. inflation rate of 2.9 percent is the lowest since March 2021, according to the July Consumer Price Index report. Since February, the food inflation rate has been 2.2 percent in each month except May, when it was 2.1 percent. Food inflation peaked at an annualized rate of 11.4 percent in August 2022. Before this year, the last time it was 2.2 percent was in May 2021.
Meat, fish, and poultry prices are up 3 percent from a year ago, cereal and bakery product prices are unchanged, and prices for dairy products and fruits and vegetables fell 0.2 percent, said the CPI report. For example, pork chops cost 7.4 percent more than a year ago and ground beef is up 4.2 percent. The price of cheese is down 2.3 percent, rice is down 3.7 percent, and potatoes are down 4.7 percent.
After underestimating the food inflation rate as it accelerated in 2022, consumers have consistently overestimated it since April 2023, according to Purdue’s monthly survey of 1,200 Americans. Nonetheless, they are tempering their expectations.
“The consumer food inflation estimate for the past 12 months and expectations for the next 12 months are the lowest they have been since the inception of the CFI [Consumer Food Insights] survey,” said Purdue’s Center for Food Demand and Analysis. The survey was started in January 2022.
In the latest survey, participants estimated the food inflation rate at 5.4 percent for the past year and said that food prices would rise 3.2 percent in the 12 months ahead. Both estimates were lower than in preceding months. Survey respondents reported spending $191 a week on groceries and restaurants during July, $3 less than in July 2023.
The USDA forecasts food inflation of 2.2 percent this year and 2 percent in 2025, which would be the lowest since 1.9 percent in 2019. Over the past 20 years, food prices have risen by an average of 3 percent annually.
“Prices are still too high,” said President Biden, although the CPI report showed, he said, that “we continue to make progress in fighting inflation and lowering costs for American families.”
Americans spend 13.4 cents of each dollar on food, their second largest expense. Housing consumes 36.3 cents of the dollar.