Grocery price inflation levels off, but the cost of these items continue to rise
While the cost of eggs and some other items continue to rise, grocery price inflation overall seems to be leveling out.
The Bureau of Labor Statistics consumer price index for food at home was nearly flat from January to February. That’s because the index measures grocery costs on average. Major price hikes in a few food categories were offset by drops in several others.
For example, the price of eggs rose 10.4% and beef prices rose 2.4% from January to February. The average cost of cereals, bakery products, seafood, processed fruits and vegetables also saw slight increases over the same period. However, all other categories including poultry, pork, milk, and frozen food experienced average price declines.
Make no mistake ‒ grocery prices remain high. Eggs alone cost 58.8% more than they did this time last year and are expected to keep rising in price as bird flu continues to affect the industry. The overall food at home index rose 1.9% over the last 12 months.
One way policymakers could try to curb inflation is by raising federal interest rates, but that would come with a slew of other economic consequences including a risk of increasing unemployment. The Federal Reserve announced it would keep interest rates steady Wednesday, taking a wait-and-see approach as the impact of President Donald Trump’s tariffs play out.
In a press conference Wednesday, Federal Reserve Chair Jerome Powell acknowledged Americans’ dissatisfaction with the total that flashes on the screen when it's time to pay up at checkout. However, he laid blame with past inflation from 2021, 2022, and 2023, when prices went up and never came down.
“They’re unhappy and they’re not wrong to be unhappy that prices went up quite a bit and they’re paying a lot for those things,” Powell said. “That is the fundamental fact and has been for a long time, a couple of years, why people are unhappy with the economy.”
Powell said Americans’ discontentment is not in response to current increasing inflation or rising unemployment, both of which have not changed more than one percent over the last several months.
“It’s a pretty good economy,” Powell added. “But people are unhappy because of the price level. And I completely understand and accept that.”
Bankrate Chief Financial Analyst Greg McBride agrees, noting the difference between inflation, as defined by economists, and prices which are influenced by many factors including supply chains and the cost of labor playing out over a stretch of time.
"You look at your receipt, those numbers are a lot higher than they were a few years ago but what inflation measures is the change in price over a much shorter period of time," McBride told Paste BN. "Because inflation's come down, it doesn't mean it's gotten cheaper at the supermarket."
While Powell said inflation expectations remain "well-anchored" in the long run, the Federal Reserve’s updated economic projections do predict higher core inflation and slower economic growth by the end of the year.
"We were expecting a slower pace of economic growth coming into the year, but those expectations have been revised lower," McBride said. "We were hoping to see some progress on inflation this year, but now I think the jury is very, very much out on whether or not that will materialize."
A closely monitored FedWatch site shows more than 80% of forecasters expect the Federal Reserve will leave interest rates where they are at its next meeting in May.
Reach Rachel Barber at rbarber@usatoday.com and follow her on X @rachelbarber_