5 facts about grocery price inflation

With inflation impacting the price of food at grocery stores, Yahoo Finance food reporter Brooke DiPalma breaks down five facts about grocery prices and how they've changed.

Video Transcript

DIANE KING HALL: The White House is out with a new blog post about grocery prices and their recent dynamics. Yahoo Finance got a first look. Our own Brooke DiPalma joins us now to bring us some of that data, right?

BROOKE DIPALMA: That's right. Yeah, well, the White House is out with those five facts about what they say is the latest when it comes to grocery inflation. Now, this comes ahead of the next CPI print set to be released on Tuesday, June 13, before the market open.

Now, the first fact, here grocery prices matter to Americans it makes up about nearly or more than 10% of consumer total spending. And because of that, grocery prices have a significant impact on how Americans talk and think about inflation, saying when groceries cost more, American households incorporate that into their expectations of future overall inflation in the near future. So how they view in future will pan out in the near future.

But the good news here is that the Council of Economic Advisors say that prices are dropping, what they refer to as cooling. Of course, we know that groceries make up about 1/10 of the overall consumer basket. And so on a 3-month average, we're seeing grocery prices drop about 0.9% in April. So that's good news. Once again, May data expected to come out next week.

And what we also know is that there is now less upward pressure on grocery inflation. We're seeing decline in egg prices. We're seeing decline in produce like fresh fruit. That's driving grocery inflation down.

Of course, last month we saw egg prices drop 1.5%. And on a 3-month basis, egg prices dropped 18%. But they're still higher year-over-year. They're up about 21.4%, of course, that was shell shocking earlier this year when shoppers saw that on their shelf.

Now something not mentioned within the post, but something that Yahoo Finance's tracking significantly here is the price of sugar. We've seen sugar prices see a recent increase. We know their futures are higher compared to a year ago. And when we asked J.M. Smucker CEO, of course, that's behind so many different consumer product goods, like Jif peanut butter.

He did say that right now, their view is that we are still in an inflationary environment. And so the White House saying that inflation is cooling a bit, but major executives still seeing a bit of sticky inflation there as well.

DIANE KING HALL: Sticky inflation. We are certainly seeing that. I mean, look, although prices have come down, they still really haven't cooled enough. This is a personal perspective here. I mean, look, sure egg prices are down and some prices are down, but we want more relief. What can we expect?

BROOKE DIPALMA: Right, well, prices are expected to remain higher this year. And in a quote from the Council of Economic Advisors, they say, "Looking ahead, the staff expects grocery inflation to continue improving alongside headline inflation, but remain elevated relative to its prepandemic levels through the rest of 2023."

So essentially, through the rest of this year, we can hopefully expect some declines. But prices are not going to go back immediately to what they were prior to the pandemic in 2019. Of course, Diane, we've seen egg prices see some relief as these US agriculture industry continues to rebuild the flock. But we're still seeing higher prices. And we just can't get away from that just yet.

So one egg instead of 2 and a teaspoon of sugar instead of a cup.

BROOKE DIPALMA: That's right, Dianne. We're making-- we're making ends meet here.

DIANE KING HALL: Our bread, our banana bread is going to be a little different compared to the pandemic banana bread.

BROOKE DIPALMA: Exactly. Maybe one less sugar then.

DIANE KING HALL: Exactly. That's right. All right. Thank you, Brooke DiPalma.