Grocery inflation is up 10.2% compared to this same time last year, and dining out is up 9.5% year-over-year, while overall inflation climbed 6% annually. Now the experts say your grocery bill won’t ever be cheap again.
Are high grocery prices here to stay?
The consumer price index (CPI) report for February from the Bureau of Labor Statistics (BLS) showed overall inflation stood at 6% year-over-year, while the cost of groceries jumped 10.2% on an annual basis.
Prices were even higher from January 2022-January 2023, with an 11.3% jump in prices.
Adding to the woes of high grocery prices is so-called “shrinkflation,” where manufacturers have downsized the quantity, weight, or volume of a given product in a container while selling it at the same or a higher price.
What’s driving high food prices?
Food producers are blaming their own operating costs as forcing their hand when it comes to raising prices. Labor and transportation costs are higher than a few years ago. Some are blaming higher ingredient prices, such as wheat. However, ingredient prices have been on a downswing for months, according to CNN.
Among the other factors cited in rising grocery cost is the war in Ukraine, supply-chain snags, the avian flu epidemic that drove up the cost of eggs and chicken, as well as climate issues like drought, CBS News reported.
Some industry experts and critics say some food producers have boosted prices on certain items in which they saw too-low prices in previous years. A number of CEOs at major grocery chains claim their profit margins are as thin as ever, but the companies are raking in record profits, according to a CBC News report.
Why we may never see prices go down
Many food makers seized the opportunity brought by inflation to correct pricing on items that were priced too low from the start. Some food makers also argue that dropping prices undermines the value proposition for certain brands. They say lowering prices gives consumers the impression that the food quality has gone down or makes them believe they were paying too much in the first place.
Not all analysts see grocery gloom
Technically, grocery inflation has declined for six consecutive months since August, when it reached a high of 13.5%, the highest mark for the overall food category since May 1979 and the highest in the food-at-home category since March 1979, Yahoo Finance reported.
Still, the current 10.2% year-over-year is a considerable amount by any measure and especially challenging for people on fixed incomes.
Last year, Morgan Stanley research reported that grocery prices on a global scale jumped 65% in the previous two years. However, the analysts expected prices to peak in 2022 and begin to drop in 2023. However, it’s still too early to tell. While there was a drop in February compared to December 2022, the amount was marginal from 0.4% to 0.3%, and prices are up 13.5% year-over-year in 2023.