Inflation: Grocery prices ticked up slightly in August, but egg prices continued falling
Grocery bills stayed about the same in August.
Prices that consumers see at their local supermarkets such as Kroger (KR), Albertsons (ACI), and others increased slightly in August, up 0.2% month over month on a seasonally adjusted basis, according to the Bureau of Labor Statistics' (BLS) August Consumer Price Index (CPI) released Wednesday. Compared to last year, the cost of food at home rose 3.0%, compared to a 3.6% increase in July.
Overall, consumer prices increased by 3.7% in August over the prior year and 0.6% month over month, as energy prices caused inflation to spike.
America's largest grocer, Walmart (WMT), expects the pace of food inflation to continue to slow, but it will take some time for prices to come down to where they were two years ago.
"Inflation and higher prices are kind of with us," Walmart CEO Doug McMillon said at the Goldman Sachs Global Consumer Conference in New York City on Tuesday. "We'll see disinflation but not all the way back to deflation. ... Certainly not in the short term."
What's driving higher prices
The meats, poultry, fish, and eggs category was one of the biggest drivers of food inflation month over month. Prices for these items increased by 0.8% on a seasonally adjusted basis.
"Pork saw the biggest increase since November 2021," BLS economist Steve Reed told Yahoo Finance. "Meat prices being [up] across the board — beef, pork, poultry — was the most notable thing."
Prices of pork increased 2.2% last month and bacon prices jumped roughly 4%, while chicken prices jumped 2.1%.
Other items that saw price increases include fresh biscuits, rolls, and muffins, which rose 2.7%; shelf-stable fish and seafood, up roughly 2%; and salad dressing, up 2.1%. Ahead of Halloween, prices for sugar and sweets saw a 0.6% uptick month over month.
Looking ahead, higher gas costs could also hit groceries once again.
"It's certainly reasonable to think that some of the higher gas fuel costs could be having some effect on pricing," Reed said. "I don't think that usually takes long to pass through."
Egg prices continue dropping as avian flu moves into rearview mirror
After a huge spike earlier this year, one area that continues to see price declines is eggs.
The cost of eggs dropped 2.5% last month and is down 18.2% compared to the same time period a year ago. The average price for a dozen large Grade A eggs is currently $2.04.
Reed wasn't too surprised by the shift, saying that egg prices are "always volatile."
Kevin Bergquist of Wells Fargo said the cost of eggs should stay relatively stable; however, he added a side of caution.
"The most recent USDA egg wholesale numbers are showing a slight price increase for producers in the last couple of weeks," Bergquist told Yahoo Finance. "If producers are able to push this through to buyers at the grocer level, and if this data is captured by the next CPI report, then you could possibly see a very slight egg price increase, slight being the keyword."
Trey Braswell, president of Braswell Family Farms, which is based in Nashville, N.C., echoed that sentiment. Braswell told Yahoo Finance that he expects prices to be "less volatile for consumers for a while" as long as COVID restrictions don't begin again and "birds stay healthy."
Good news on the horizon, though: The avian flu appears to be behind us. Bergquist said he is "not really" seeing the highly contagious avian flu that impacted thousands of flocks and caused prices to spike 70% year over year in January.
"There have been some notable [avian flu] incidents in the global Southern Hemisphere, but the outlook for North America is cautiously optimistic," Bergquist added. However, we're not out of the clear yet, as "another outbreak in 2024 is entirely possible," he said.
Additionally, an increase in baking in the fall and winter is another potential factor for egg prices.
"October is the start of the holiday baking season when egg prices have historically begun to increase," Bergquist said.
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Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at [email protected].
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