New inflation data could signal cheaper grocery prices, more discounts, expert says
(NEW YORK) — As Americans continue to experience sticker shock with volatile food costs, a slight ease of inflation last month could provide relief for consumers’ wallets — particularly at the grocery store.
Food prices rose at a much slower pace than overall inflation since the same time last month, the Department of Labor shared Wednesday in the latest consumer price index findings.
The food at home index — food purchased at grocery stores — declined by 0.2%, while the food away from home index — everything from takeout to dining at restaurants — rose 0.3% over the month, according to the Department of Labor.
Dr. Michael Swanson, Wells Fargo’s Chief Agriculture Economist, told ABC News that this is the first time in a while that consumers have spent more money on dining than on groceries.
“It surprises people because it’s kind of a new development in the last couple of years where we finally saw the dollars exceed spending away from home,” he said. “When you buy food away from home, 70% of that is overhead and labor, so you’re really only buying 30% of the food with the dollar that you spend.”
Compared to the same time last year, there has been a 3% increase in the gap between the two categories, which Swanson said indicates will “really push people to prepare more meals at home and take it with them, because it’s such a big premium right now to be eating away from home with this inflation rate differential.”
Some staple food at home products fell in April compared to a year ago, including bread, poultry and eggs, the CPI data showed.
Prices for other items like breakfast sausage and ice cream, however, increased at a pace near the level of overall inflation.
“Even when we talk about food at home, there’s a huge range between highly prepared and more basic ingredients,” Swanson said. “You can save a lot of money even at the supermarket buying some food that’s less prepared.”
Looking at the CPI numbers, Swanson said, “is really important” because it offers “a much bigger survey” thanks to the thousands of government price trackers who gather the new data, rather than if shoppers go with their “gut instinct about what’s in their market basket.”
What he has observed ahead of the summer months is retailers getting more customers in the door with deals.
“We’re hearing from customers that manufactured food is gonna be more of an emphasis on what we used to see a lot,” such as “coupons or buy one get one or promotions,” Swanson said.
He added that “consumers should get their game on — because if you shop around you’re going to find some pretty good promotions. But if you don’t, you’ll miss them.”
Aldi, for example, recently announced discounts on hundreds of popular seasonal best-sellers from steaks to road trip snacks.
“I do expect it to continue because from what we’ve seen, all these companies are really battling for market share — so we’re gonna see more of this competition for market share, and this usually reflects either quality or price and hopefully both,” Swanson said.
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