Dive Brief:

• Food-at-home prices rose in January at an 11.3% annual rate, down from 11.8% the month before and their lowest rate of increase by that measure since last April, according to Consumer Price Index data released Tuesday by the U.S. Bureau of Labor Statistics.
• The food-at-home index was up 0.4% in January compared with December 2022, up from the monthly increase of 0.2% recorded last month.
• Overall inflation edged down in January to a yearly pace of 6.4%, building a string of declines that started after the metric hit a high of 9.1% last June.

Dive Insight:

While grocery prices again moved ahead forcefully last month, the latest data from the BLS indicate that the slow but steady deceleration that has come to define the agency's food-at-home index since mid-2022 year-over-year continued as 2023 began.

In January 2022, food-at-home prices recorded an annual increase of 7.4% during a month that saw overall inflation reach 7.5%, which was at the time the fastest pace in 40 years. But those figures seem tame when compared with the corresponding figures for last August, when food-at-home inflation peaked at 13.5% and the across-the-board Consumer Price Index came in at 8.3%.

Since that point, however, both metrics have continued to come down — although the overall rate of inflation for January was higher than anticipated and also rose month-to-month more rapidly than it did in December. That suggests that the Federal Reserve’s efforts to blunt price increases through multiple interest rate hikes have still not had their full intended effect.

Prices for meats, poultry, fish and eggs rose 0.7% in January compared with the month before, driven by an 8.5% increase in the price of eggs, the BLS reported. By comparison, that category posted a month-to-month increase of 1% last month, as egg prices were up an even higher 11.1%.

Cereals and bakery products rose 1% on a monthly basis in January, and nonalcoholic beverage prices rose 0.4%, according to the BLS. Meanwhile, the index for dairy and related foods was unchanged in January compared with December, while prices for produce were down 0.5% by that measure. 

Gasoline prices, which like the cost of groceries is a key way consumers evaluate their spending power, were up month-to-month in January after falling in December, the BLS said. The index commodity rose 2.4% last month after falling 9.4% in December.

According to AAA, the price of a gallon of regular gasoline in the United States was $3.14 on average as of Tuesday. A month earlier, the price averaged $3.29, AAA said.