Food Inflation Finally Eases in March

The latest CPI data points to relief in prices across several categories.
March 2023 CPI

It’s the good – at least better – news that grocers, suppliers and consumers were looking for after several months of prices on the incline. The latest Consumer Price Index (CPI) data from the U.S. Bureau of Labor Statistics (BLS) shows that food-at-home prices declined 0.3% in March, the first monthly decrease in that index since September 2020.

Overall inflation also seemed to be comparatively more stable in March, rising 0.1% for the month. That’s down from the 0.4% hike in February. Although the general CPI is still up 5% on a year-over-year (YoY) basis, the takeaway from the latest numbers is that the red-hot price pace is cooling in many areas of the economy.

Within the food-at-home sector, three of the six major grocery indexes posted declines. The CPI for meat, poultry, fish and eggs slipped 1.4%, with the index for the much-ballyhooed egg category dropping 10.9% last month. The index for fruits and vegetables was 1.3% lower in March, while dairy and related products ticked slightly downward by a 0.1%.

That said, the CPI for other food products remained elevated. Cereals and bakery rose 0.6% in the same time frame, while the nonalcoholic beverage category ticked up 0.2%. The index for the “other food at home” category edged 0.4% higher.

In contrast to an easing of food-at-home prices, the BLS reported that the CPI for food away from home went up 0.6% in March, continuing a recent string of price increases in the foodservice arena. Heading into late spring and summer, the CPI for full-service meals climbed 0.7%, with limited-service meals rising 0.5%.

In March, shelter was the biggest contributor to overall inflation, according to BLS data. Prices for household furnishings and apparel also rose in March, while the index for gasoline dipped 4.6%.

The greater-than-expected softening of grocery inflation last month, along with the latest employment data affirming job growth in March, may impact the Fed’s decision to raise interest rates when it meets again in early May. Other factors are at play, such as the recent banking crisis and the stickiness of core inflation that remains above target levels.

For now, the news is heartening for those in the food retailing business. Mark Zandi, chief economist at Moody’s Analytics, told news outlet CNBC that the June 2022 peak seems to be receding. “Inflation is fundamentally moderating,” Zandi said. “And all the trend lines look good. I can say that with increasing confidence.”