Grocery prices see biggest spike since 2022 in December
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Grocery prices rose at the fastest pace in three years, keeping pressure on household budgets even as overall inflation held steady in December.
Why it matters: The jump in costs highlights the challenge for the White House in the lead-up to midterm elections. Broad inflation relief is little consolation for Americans if they aren't seeing it reflected in grocery bills.
By the numbers: Grocery prices (or "food at home," as the Bureau of Labor Statistics calls it) rose by 0.7% in December, the largest monthly gain since the peak inflation period in August 2022.
- Food inflation was evident at restaurants, too: Costs for dining out (or "food away from home") rose by a similar amount, the largest monthly gain in three years.
The intrigue: Grocery prices were up roughly 2.4% in December compared to the prior year.
- But that masks double-digit price increases for a slew of household staples over the past 12 months, including coffee (+20%), beef (+16%) and candy (+10%).
- President Trump rolled back tariffs on a slew of household staples late last year. Among them: bananas, which saw prices fall by almost 2% in December. But costs are still up roughly 6% compared to the prior year.
- There is some relief elsewhere in the grocery store: Egg prices, for instance, are down more than 20% from a year ago, with an 8% decline in December alone.
The big picture: The Consumer Price Index rose 2.7% in the 12 months through December, while a key gauge excluding food and energy costs rose by 2.6%. Both measures held steady from November, remaining at a four-year low.
- Trump praised the figures on Truth Social, calling them "Great (LOW!) Inflation numbers for the USA."
Reality check: Consumers have been grappling with notably higher price levels, a result of the cumulative price increases seen over the last five years.
- Consumer sentiment edged up in early January but remains at historically low levels, according to the University of Michigan. Frustrations with high prices have spilled over into Trump's approval ratings.
What they're saying: The food price spike signals that "for many consumers, one of the primary inflation pressure points in recent years is still a challenge," Jim Baird, chief investment officer at Plante Moran, wrote on Tuesday.
- Tariffs are not the lone factor behind food price hikes, Baird says: "A more challenging labor outlook in the U.S. has increased wages for agricultural workers and supply disruptions from disease, weather conditions, and the war in Ukraine have raised food prices globally."
The bottom line: Inflation is sitting well below its peak. But higher costs are still evident in grocery store checkout lines.
