Inflation is crushing the grocery budgets of Americans across the U.S., with food prices accelerating to a new four-decade high in July.
Although the consumer price index, which measures a basket of everyday goods including food, rent and gasoline, came in cooler than expected at 8.5% in July, food prices accelerated further, the Labor Department reported on Wednesday. The food at home category, which tracks the cost of groceries, surged 13.1% over the last year, the most significant increase since March 1979. On a monthly basis, prices jumped 1.4%.
"Consumers are getting a break at the gas pump, but not at the grocery store," said Greg McBride, chief financial analyst at Bankrate.com. "Food prices, and especially costs for food at home, continue to soar, rising at the fastest pace in more than 43 years."
Americans are paying more at the grocery store for a number of items that have climbed considerably in price over the past year. That includes staples like eggs (38%), chicken (16.6%), milk (15.6%), potatoes (13.3%), rice (12.7%) and fresh fruits and vegetables (8.2%).
Part of the reason for the unprecedented climb in food costs is the Russian war in Ukraine, which limited grain shipments from one of the world's biggest suppliers.
Rising food prices have been one of the most visceral reminders of red-hot inflation, which has created severe financial pressures for most U.S. households. The burden is disproportionately borne by low-income Americans, whose already-stretched paychecks are heavily impacted by price fluctuations, particularly for necessities like food and gasoline.
In another worrisome sign, new data from the Labor Department on Thursday that tracks inflation at the wholesale level showed that food prices climbed higher in July, surging 1% – the fastest increase in four months. That gauge, known as the producer price index, captures price movement before it reaches consumers at the retail level and, therefore, may foreshadow looming price increases for businesses and consumers.
"Inflation will only decline at a painfully slow pace," said Seema Shah, chief global strategist at Principal Global Investors. "Food and energy inflation are wild cards. Although inflation should peak soon, the broadening and stickiness of price pressures implies headline CPI will only fall to 6.5% this year, before recession accelerates the decline in 2023."