Dive Brief:

• Food-at-home prices moved up in January at a 1.2% annual rate, down from 1.3% during the previous month, according to Consumer Price Index data released Tuesday by the U.S. Bureau of Labor Statistics.
• The food-at-home index rose 0.4% last month compared with December 2023, the highest month-to-month rate of grocery inflation since the metric came in at that level in January 2023.
• Overall inflation declined in January to an annual rate of 3.1%, a level that was down from December but higher than economists projected.

Dive Insight:

After outpacing the full Consumer Price Index for more than a year and a half, grocery inflation dropped below the overall inflation rate last August and has remained in that territory ever since.

The significance of that transposition in the two economic measures came into stark relief on Tuesday, when the BLS reported that so-called core inflation, which excludes food and energy prices, held steady at 3.9% — well above the rate of overall inflation. The latest data demonstrated that costs for groceries and gasoline, which consumers often associate with rising prices, can also have a moderating effect on the overall inflation rate.

Grocers have been working to demonstrate to shoppers — who have been hyper-sensitive to food prices —  that they have taken steps to help make a trip to the supermarket more affordable, and the inflation figures for January show that costs for some foods have come down over the past year even as other goods have become more expensive. Experts have noted that consumers remain highly concerned about prices and have run out of capacity to dig deeper to cover their costs.

Prices for meat, poultry, fish and eggs were down 0.9% in January compared with the same period last year, while prices for dairy and related products were off by 1.1% year over year, building on declines in December 2023, the BLS reported.

Looked at on their own, fish and seafood prices were down 2.6% year over year in January, with costs for fresh seafood off 3.9%. Prices for dairy products were 1.1% lower last month than they were a year ago, led by a 3.1% decline in fresh whole milk prices. Egg prices, which a year ago were skyrocketing amid a bird flu-driven supply crunch, plummeted 28.6% in January.

Yearly inflation in the category that includes nonalcoholic beverages was up 3.4% in January, while prices for frozen noncarbonated juices and drinks rocketed ahead by 29%.