Topline
Despite recent trends of cooling inflation, grocery prices in the second quarter of 2023 remained a concern among U.S. households—especially for families with children—according to a report by data consulting company Dunnhumby, suggesting American shoppers remain worried about surging grocery bills even as price increases ease.
Key Facts
Consumers perceived the inflation rate for food consumed at home to be 22.6% as of April, according to Dunnhumby’s study, which was based on survey data gathered from over 8,000 grocery shoppers nationwide.
That’s more than triple the 7.1% year-over-year inflation rate for food at home estimated by the Bureau of Labor Statistics in April—since then, grocery inflation has fallen to 4.7% year-over-year as of June, down from 13.5% as of August 2022.
Some 61.8% of American households acknowledged having difficulty covering an unexpected expense of $400, up 1.3% from November 2022, according to the report.
However, families with children told Dunnhumby they have been even more hard hit over the past year: 72% would not be able to pay the $400, and 36% of them have either skipped or reduced the size of their meals for financial reasons.
Some 40% of shoppers now browse multiple grocery stores in search of products with the best value, up 9% since last year, and 52% of shoppers responded it was “extremely important” that vendors provided them with relevant coupons, a 6% increase since last year.
Key Background
In June, the United States recorded the lowest year-over-year inflation rate since 2021, with overall prices notching up 3% as at-home and restaurant food prices rose a combined 5.7%. That’s a relief after a two year surge, which saw inflation rates soar as high as 9.1% in June 2022, led by soaring energy prices amid Russia’s invasion of Ukraine and a jump in food prices driven partly by supply chain delays and the avian flu. Inflation had slowed to a lower-than-expected 4.9% at the time of the Dunnhumby survey in April. The survey’s consumer responses seem to challenge the otherwise optimistic data, which showed cheaper diesel and lowered transportation costs accounting for a 0.2% dip in grocery prices from March to April. But while price growth has eased, many goods haven’t fallen in price, either: According to an NBC News analysis of federal inflation data, some goods are still 40% more expensive than they were in 2020.
Tangent
The Federal Reserve has boosted interest rates over the last year in a bid to tame inflation, increasing rates by another quarter percent last month to the highest levels since 2001. Hiking interest rates can put a check on consumer prices but also hamper the nation’s economic growth, and while the Fed’s staff are no longer forecasting a recession, inflation rates remain a ways off from the central bank’s desired 2% target.
Surprising Fact
Inflation is receding internationally, too. The EU reported inflation rates dropping to 5.3% in July, and South Korea experienced its lowest inflation rate in 25 months. Per the British Retail Consortium report yesterday, food inflation in the UK had dropped to 13.4% in July.
Fed Hikes Interest Rates By 25 Basis Points To Highest Level Since 2001 (Forbes)
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