December Inflation Report: Price Increases Tick Higher, but Show Moderation

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Jan. 11, 2024, 8:51 a.m. ET

Food price increases eased slightly in December, providing moderate relief to consumers who have faced higher costs for groceries.

Overall, food prices rose 0.2 percent over the month, the same rate they climbed in November.

Grocery prices increased 0.1 percent, as they did in November. The cost of eating at restaurants rose 0.3 percent, a slight slowdown from 0.4 percent the month before.

Food price increases also continued to ease compared to a year earlier. Overall, food prices were up 2.7 percent in the year through December, down from 2.9 percent in November. Still, that is a faster rate than prices were rising before the pandemic.

Prices for fruits and vegetables decreased 0.1 percent in December, down from November, when prices rose 0.3 percent. Poultry and fish, a gauge of the cost of meat, were flat after declining 0.4 percent the month before.

In December, eggs saw a big jump in prices, rising 8.9 percent from the month before. That was up from November, when prices increased 2.2 percent. Still, egg prices are down 23.8 percent over the past year.

Food inflation has cooled since it peaked in mid-2022 as supply shocks and high transportation costs have moderated. Economists have said that they anticipate food inflation to continue slowing in the coming months, unless unexpected events like geopolitical turmoil or extreme weather put pressure on prices again.

Stephen Juneau, a senior U.S. economist at Bank of America, said that consumers have seen some relief at the grocery store, but prices at restaurants were continuing to face inflationary pressures.

The cost of dining out has not eased as much as grocery costs in recent months, largely because business owners are dealing with higher labor costs. Wage growth has cooled in recent months, but it is still elevated compared to levels before the pandemic. On an annual basis, the cost of eating at restaurants rose 5.2 percent in December.

“You’re seeing not as much sticker shock at the grocery store anymore, but when you go out to eat, you’re still facing a difficult pricing environment,” Mr. Juneau said.

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