December Inflation Figures a Mixed Bag

The rate of inflation overall eased in December, according to the Bureau of Labor Statistics, but price increases in several key food categories remained high as the year came to a close, according to a new report from Numerator.

Federal data released on Jan. 12 showed prices in the final month of 2022 were up 6.5% when compared to December of 2021. Prices from November to December were down 0.1%, the first month-over-month decline since May 2020. 

The monthly Inflation Report from Numerator reported seasonally adjusted prices for all food at home purchases increased 1.2% in December, an acceleration from the 0.5% increase in November.

In December, seasonally adjusted prices for cereals and bakery products increased 0.4%; prices for meats, poultry, fish, and eggs increased 1.8%; prices for dairy and related products increased 0.9%; prices for fruits and vegetables increased 0.8%; prices for nonalcoholic beverage and beverage materials increased 0.1%; and prices for other food at home increased 1.5%.

On a year-over-year basis, between December 2021 and December 2022, Numerator reported prices for food at home increased 11.4% overall. Prices for cereals and bakery products increased 14.2%; prices for meats, poultry, fish, and eggs increased 8.6%; prices for dairy and related products increased 14.3%; prices for fruits and vegetables increased 8.6%; prices for nonalcoholic beverages and beverage materials increased 11.2%; and prices for other food at home increased 13.1%.

In response to higher prices and reflecting the shift from goods to services and from staying home to going out, consumers have cut back on the number of items they purchase overall, Numerator said. 

These cuts have been larger among lower- and middle-income consumers and in discretionary sectors. The sectors showing the largest declines in unit purchases relative to a year ago are sports, electronics, home & garden, toys, and tools & home improvement. The sectors showing the smallest declines in unit purchases relative to a year ago are pet, entertainment, limited-service restaurants, grocery, and apparel. 

According to Numerator, within the grocery sector, lower-income consumers (with annual household income below $40,000) have reduced purchased quantities by 7.9% relative to a year ago, middle-income consumers ($40,000-$80,000 annual household income), have reduced purchased quantities by 10.5%, and higher-income consumers (more than $80,000 annual household income) have reduced purchased quantities by 1.3%. 

Within grocery, consumers have cut back more on higher-cost items such as fresh meal kits, frozen foods, and meat, and they have cut back less on lower-cost foods and daily essentials, such as bread, dairy, produce, and pasta & noodles.

The Numerator Inflation Report is produced and published by Numerator under the leadership of Numerator Chief Economist, Dr. Leo Feler. The report uses Numerator’s first-party and real-time consumer data, aligned with the methodology the U.S. Bureau of Labor Statistics uses to calculate the Consumer Price Index.