Food Prices Continue to Climb, Adding to Consumers’ Budget-Balancing Act

The Bureau of Labor Statistics has given its latest reading on inflation, and the data released Wednesday (Jan. 15) notes the prices consumers pay (as measured by the Consumer Price Index) for many of life’s essentials continue to rise, which translates into increased pressure on household budgets.

The “headline number” for the overall Index rose 0.4% over the previous month, ahead of the 0.3% increase seen in November. The CPI increased 2.9% on an annualized pace, which is higher than the 2.7% pace measured as of November.

As has usually been the case, energy prices remain volatile. The energy sector significantly contributed to this monthly rise, with a 2.6% increase driven by a 4.4% hike in gasoline prices. Food prices also climbed by 0.3%, with both food at home and food away from home experiencing similar increases.

As for some granular insight into the costs of filling the pantry, the BLS noted that “four of the six major grocery store food group indexes increased in December. The index for cereals and bakery products rose 1.2%  over the month, after falling 1.1% November. The meats, poultry, fish, and eggs index increased 0.6% in December.” Eggs were the culprit here, as “index” tied to that staple rose 3.2% in the latest reading. Overall food prices are 2.5% higher than they were when measured against December 2023.

Paying for Groceries Over Time

PYMNTS Intelligence has long chronicled the balancing act that individual consumers and households must navigate as grocery costs remain stubbornly high. With finite money on hand, choices must be made in the aisles and online. Through the past several months, consumers have made trade-offs or trade-downs. In at least some cases, consumers are moving from credit to debit to pay for food in a bid to pay with cash on hand, and avoid taking on more debt. As reported by PYMNTS Intelligence, in the “Younger Consumers Lead Payment Shift From Credit to Debit” report, the increased use of cash and debit was up 34% for groceries well into 2024 compared to the previous year. Elsewhere we found that about half of younger consumers were using installment plans to spread the costs of groceries out over time.

Housing Continues to Get More Expensive

The cost of shelter remains stubbornly high as well. The CPI data indicate that for December, these costs were 0.3% higher, month over month, a pace that has been in place for the last several months. On an annualized basis, housing is 4.6% pricier than had been seen 12 months ago.

“The index for owners’ equivalent rent also rose 0.3% over the month, as did the index for rent,” the Bureau reported. The report also pointed out the fact that the 12 month inflationary trends have been significant includes indices measuring motor vehicle insurance (prices were up 11.3%), medical care (adding 2.8%), education (4% higher through the past year) and recreation (1.1% more expensive through the past 12 months).