Grocery prices jumped 1.2% last month as food inflation returns to pre-pandemic levels


Higher grocery bills are here to stay.

Overall food prices were unchanged month over month in April, while food inflation increased 2.2% year over year, per the US Bureau of Labor Statistics.

Groceries prices jumped 1.1% compared to last year, but dropped 0.2% compared to March.

“Grocery store prices are sort of flattening out,” BLS economist Steve Reed told Yahoo Finance. “This month, they were a mixed bag with some increases and some declines.”

Price growth is returning to pre-pandemic levels, where volatility primarily exists in specific categories affected by temporary supply issues, added Reed.

Wage growth can also cause prices to change, as it adds cost to producers. However, “1% to 2% year-over-year growth in food prices is the normal,” said Wells Fargo chief agricultural economist Michael Swanson.

He expects food inflation to “stay” in this lower range, reflecting the wages of those producing the food.

“That’s what the Fed’s watching, the Fed [is] Saying, we need the wage growth and the price growth to come back into balance around our 2% target and food is doing its piece — better than some of the other sectors,” Swanson said.

A shopper takes a carton of eggs from the cooler in a grocery store in Washington, DC, on Saturday, April 6, 2024. (Tom Williams/CQ-Roll Call, Inc via Getty Images) (Tom Williams via Getty Images)

Items that saw the largest monthly jump include butter, up 4.3%; flour and prepared flour mixes, up 3.2%; and breakfast cereal, up 3.1%,

Frozen non-carbonated juices and drinks saw the largest year-over-year jump across the entire CPI report, up 29.2%. According to Reed, this is the largest increase for the category ever, presenting a challenge to the industry.

Coca-Cola (KO) CEO James Quincey told Yahoo Finance, “US consumers are doing better in the sense that wages are rising relative to inflation and purchasing power is kind of stabilizing out… The lower-income consumers are under a little more pressure, looking more clearly for value.”

Coca-Cola’s unit case volume increased 1% in Q1.

Egg prices, which many feared would see a huge uptick due to a few cases of bird flu, dropped 7.3% last month. A dozen large Grade A eggs now cost $2.86. Swanson expects prices to remain lower as producers get past any spring outbreaks of the avian influenza.


This fresh read on CPI comes as a group of 40 legislators, led by Senator Elizabeth Warren, called on US President Joe Biden to investigate grocery store chains for price manipulation. In the letter, they urged the president to take action to lower food costs.

The cost of dining out drove overall food inflation higher in April. Food away from home jumped 4.1% compared to a year ago.

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However, that’s the 14th straight month of “sequential deceleration,” per a note from JPMorgan analyst Ken Goldman, as the pace of growth slows down.

Swanson says prices have to drop soon.

“There’s going to be more softening in that category. They just can’t continue to run at four times higher than inflation rate, and food at home,” he said.

Month over month, food away from home was up 0.3%. Many were expecting an even more significant increase as higher commodity costs and labor inflation persists, particularly in California, where the FAST Act increased the minimum wage to $20 per hour on April 1.

Global chains like Starbucks (SBUX) and McDonald’s (MCD) have seen US consumers pull back on spending. In their latest quarterly results, both chains missed sales growth expectations from the Street.

“High rents, food and energy prices are squeezing low to medium income households, a downside risk to our upbeat outlook for consumer spending for the remainder of this year,” Ryan Sweet, Oxford chief US economist, said in a note to clients.

Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @Brooke DiPalma or email her at [email protected].

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