Important Takeaways:

• Inflation may be rapidly cooling, but there’s one area that continues to eat away at Americans’ budgets: Stubbornly high food prices.
• Rising food costs were one contributor to the hotter-than-expected inflation report on Tuesday, with food prices rising 0.4% in January from December, a faster pace than the overall 0.3% rise in the Consumer Price Index (CPI).
• The CPI, a basket of goods and services typically bought by Americans, measures two types of food purchases, groceries and “food away from home,” or restaurant and other prepared meals. Both are rising, but restaurant prices are increasing at a faster pace, jumping 5.1% on an annual basis compared with a 1.2% increase in grocery costs.
• Any increase in food prices may be especially painful to American consumers, given that supermarket prices are now 25% higher than in January 2020, while inflation has increased 19% over that same time. That means even though grocery costs are now rising at a slower pace than in the depth of the pandemic’s inflationary spike, the same shopping basket still costs more than a month or a year ago, a fact that has soured many consumers on the economy.
• The reason for inflation’s stubborn hold on food prices can be linked to a number of issues, from higher labor costs at manufacturers that trickle down to consumers, to record-low cattle numbers that are driving up the cost of beef and steak.
• But some policy experts see other issues at work: Corporations, they claim, are increasing prices simply because they can. President Joe Biden last month warned that companies are “ripping people off” with a combination of price gouging, “greedflation” and shrinkflation.
• In fact, five types of food have been responsible for 30% of grocery inflation in recent years… They are beef and veal; poultry; non-frozen, non-carbonated juices and drinks; fresh fruits and vegetables; and snacks.

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