Dive Brief:

• Spending at grocery stores rose 7.7% in August compared with the same month a year ago, according to estimated data published Thursday by the U.S. Census Bureau. Overall retail spending increased at an 9.1% annual rate.
• Retail grocery sales were up 0.2% last month compared with July, while total retail rose at a 0.3% monthly pace.
• Sales in the grocery sector lost momentum in August even as food-at-home prices accelerated to their highest level in more than 40 years.

Dive Insight:

As consumers continue to grapple with surging costs when they visit supermarkets, there are signs the trend may have entered a new phase.

While still up sharply in August, grocery sales increased during the month at their slowest annual rate in 2022. In July, the industry’s sales rose at an annual rate of 9.2%.

Meanwhile, food prices at the wholesale level — a key forward-looking economic indicator — held steady in August after rising in July, according to Producer Price Index data released yesterday by the U.S. Bureau of Labor Statistics.

Still, food-at-home inflation has so far shown no sign of easing, rising in August to an annual pace of 13.5%. That level has moved higher every month since May 2021.

By comparison, overall inflation eased slightly in August compared with the same stretch in 2021.

The slowing pace of grocery spending recorded last month came as research shows consumers have altered their shopping habits in an effort to fight price hikes.

People have been gravitating toward lower-cost goods and buying more private label brands even as they have continued to spend on certain premium products, according to an analysis of July sales data conducted by IRI. Consumers — including many higher up the income scale — have also been directing more of their budgets to dollar stores as they look to keep their spending in check, helping boost financial performance at chains like Dollar General and Dollar Tree.

The deceleration in retail spending on groceries recorded in August came as spending at restaurants and bars also rose at a lower rate than it had earlier in the year. Sales at those establishments were up 10.9% last month compared with the same period in 2021, down from 11.6% in July.