White House: Grocery Inflation Has Cooled

Grocery inflation is down drastically from its recent peak, grocery prices have fallen in some areas, and because wage growth has been strong, grocery purchasing power is up, said the White House in a recent blog post.

Some aspects bolstering consumer purchasing power are as follows:

• While grocery prices are high relative to before the pandemic, wages have also increased—it takes about the same number of hours (3.6 hours) for an average non-managerial worker to buy a week’s worth of groceries as in 2019.

• Twenty-seven percent of the typical grocery basket¹ experienced price declines over the past year, about the same as the average since 2000.

• Seventy-seven percent of the typical grocery basket has experienced less inflation this year than last year.

• Some of the most prominent grocery retailers, including Aldi, Amazon, Target, Walgreens, and Walmart recently announced price cuts, which may not have shown up yet in grocery price data.

Additional insights from the White House found that the nominal price of weekly grocery purchases for a typical family rose by $1.11 over the past year; however, the hourly wage grew faster—currently, it is up $1.20. Therefore, it takes slightly less work at this higher wage to buy weekly groceries, said the White House.

“As President Biden repeatedly says, families are still struggling with high prices, which is why we continue to push for lower costs in all the components of family budgets, including housing, health care, childcare, and getting rid of junk fees,” according to the White House. “Of course, grocery prices are high on that list, and it is therefore good to see relief coming in that important space.”  

The government organization indicated optimism when evaluating the future of grocery price relief, based on price markup trends.

“Markups in the grocery sector—the prices charged above operating expenses—rose after COVID and have remained high whereas other retailers’ margins have reverted back down to pre-pandemic levels,” according to the post. “As the economy continues to normalize after COVID, there is still room for margins in this sector to recede, and for those lower markups to be passed along to consumers in the form of further grocery price relief for American households.” Full Story

¹ The typical grocery basket is defined by the results of the Bureau of Labor Statistics' 2022 Consumer Expenditure Survey, adjusted over time using the CPI grocery price index.