Food inflation is down for the fourth month in a row, dipping to an annualized rate of 10.4 percent, aided by beef prices that are lower than a year ago, said the Labor Department on Thursday. President Biden said the 0.3 percent increase in food prices during December was the smallest in almost two years.
“And much of that increase was due to the avian flu outbreak, which has driven up egg prices in the United States,” said Biden. Speaking at the White House, the president said that although inflation is a worldwide problem, “it is coming down in America month after month, giving families some real breathing room.”
The monthly Consumer Price Index report said food prices rose 10.4 percent in the year ending in December. The annual food rate has exceeded 10 percent since last May. It peaked at 11.4 percent in August and has declined since. Last month, the annualized rate was 10.6 percent.
Grocery prices were 11.8 percent higher than a year ago, led by a 16.1 percent increase in the price of cereals and bakery products. Egg prices, pushed to record highs during the year-end holidays, were nearly 60 percent above year-earlier levels. Cookies cost 18 percent more. The price of white bread was up by nearly as much, and breakfast cereal prices climbed 13 percent.
Beef and veal prices were 3.1 percent lower in the past year, and steak was down by 5.4 percent. It was a reversal from the early months of the pandemic, when outbreaks of Covid-19 forced meatpackers to slow production or temporarily close processing plants.
Food is the second-largest consumer expense after housing. Shelter costs were up 7.5 percent in the past year.
“Inflation is on its back heels,” said Mark Zandi, chief economist at Moody’s Analytics, on social media. “It’s still a long way back to the Fed’s inflation target, which for CPI is 2.5 percent. But it’s well on its way.” Zandi said he was increasingly confident the economy would avoid a recession.
Americans are spending 15 percent more on household food expenditures than a year ago, according to a Purdue survey of 1,200 consumers nationwide. Ahead of the holidays, consumers shopped at discount stores more frequently and spent less on groceries, restaurants, and carry-out food.
“The 15 percent increase in food spending this year is obviously a significant change and has drawn much interest in its cause and its effects,” said Jayson Lusk, who oversees the monthly Consumer Food Insights report.
Most of the increase in food expenditures happened in early summer, said Lusk in a blog. “Spending has been fairly flat for the past several months.”
Consumers said there were fewer empty shelves now. “Back in January, about 25 percent said they were unable to find specific products they wanted to buy at the grocery store. In December, the figure was only 14 percent,” said Lusk.