Grocery Prices Surged in August, Pressuring Household Budgets

Inflation’s pace quickened in August, and in the key category of food — and specifically grocery prices — the pinch on the household budget has been palpable.

Data released on Thursday (Sept. 11) showed that in August, the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4% on a seasonally adjusted basis, following a 0.2% increase in July.

The Bureau of Labor Statistics detailed that excluding food, shelter and energy, the index increased 0.3% in August and 2.7% over the year, the highest rate since June 2023.

Category by Category

Shelter prices rose 0.4% in August, remaining the largest contributor to the monthly increase. Year over year, shelter rose 3.6%.

Energy prices also retraced recent declines. The seasonally adjusted energy index rebounded 0.7% in August after a 1.1% decline in July, and is up 0.4% over the year. Gasoline rose 0.3% in August after falling 0.5% in July.

The Cost of Filling the Grocery Basket

The food index rose 0.5% in August after being unchanged in July, bringing the 12-month increase to 3.1%, the highest since October 2023. Food and beverages prices rose 0.4% in August and 3.1% year over year.

As for the individual items filling the carts, food at home increased 0.6% in August. Within this category, fruits and vegetables rose 1.6% (tomatoes +4.5%, apples +3.5%); meats, poultry, fish and eggs rose 1.0% (beef +2.7%); nonalcoholic beverages rose 0.6%; and other food at home, dairy and cereals each increased 0.1%.

Over the year, food at home rose 2.7%, led by meats, poultry, fish, and eggs (+5.6%), followed by nonalcoholic beverages. Food away from home rose 0.3% in August (full-service meals +0.4%, limited service +0.1%) and 3.9% year over year.

There’s evidence that tariffs are at least partly to blame for the higher price of foodstuffs. And scarcer availability also has the impact of driving up prices.

As detailed in the report “Stock Out: The Impact of Tariffs on Consumer Product Prices and Availability,” PYMNTS Intelligence found over the summer that “trade disruptions are moving beyond geopolitical discussions to become a personal financial burden,” as 22% of consumers overall say they have tried to buy food products but could not for these reasons. That figure soars to 31% among those struggling as they live paycheck to paycheck.

The pressure from prices has also led to a notable tailwind for the big box retailers such as Walmart, where, as PYMNTS Intelligence had reported during earnings season that eCommerce sales were 26% higher than a year ago and digital sales for grocery were up double digits. Store-fulfilled delivery of grocery items were up 50%.

“We’re doing what we said we would do,” Walmart CEO Doug McMillon said during a conference call with analysts. “We’re keeping our prices as low as we can for as long as we can. Our merchants have been creative and acted with urgency to avoid what would have been additional pressure for our customers and members. They’ve done a terrific job managing pricing and mix across merchandise categories. They managed to generate rollbacks.”

The Retail Data

The BLS data from Thursday show that retail product prices rose 0.9% in August, led by apparel, up 2.2% after four months of declines. Motor vehicle parts rose 0.6% in August and 3.4% year over year, the highest since June 2023. Furniture and bedding increased 0.3% in August and 4.7% over 12 months, the strongest since December 2022. Appliance prices rose 0.3% in August and 0.3% year over year.

Personal care products increased 0.4% in August and 1.1% over the year. Sporting goods rose 0.1% in August, continuing gains since April, though still down 1.3% year over year.