Although inflation has considerably decreased in other areas of the economy, persistent inflationary pressures in the U.S. have kept food prices high. Consumer price index (CPI) data from the Bureau of Labor Statistics for January showed that costs for food at home, defined as food purchased from a store and prepared at home, increased 11.3% from the previous year. The overall inflation rate, which was 6.4% year over year as of January and was down from a 40-year peak of 9.1% in June 2022, is significantly higher than that.
Low-income and fixed-income families are particularly hard-hit by the rising cost of consumables. Even with the 8.7% cost-of-living-adjustment COLA, which went into effect in January 2023 and is the greatest since 1981 and increased the average monthly benefit by roughly $140, Social Security recipients still have less money available for groceries than they did a year earlier.
The Food Industry Association, food retailers are attempting to control grocery costs and policy development at FMI:
Americans are swimming in debt because Biden's inflation is so high.
They are paying sometimes 20, 30, 50, or 100% more than they did last year. pic.twitter.com/qGyVxyloeC
— Sen. Marsha Blackburn (@MarshaBlackburn) February 16, 2023
Notwithstanding the Federal Reserve’s interest rate increases, which are meant to gradually lower inflation to the Fed’s goal rate of 2%, inflation may linger in the economy. Following an unexpected fall of 0.1% in the December reading, the CPI jumped by 0.5% in January, according to the inflation data from last week. According to Andy Harig, vice president for tax, trade, sustainability, and policy development at FMI – The Food Industry Association, food retailers are attempting to control grocery costs.
“The January CPI illustrates that inflationary price increases are not resetting as quickly, or as uniformly, as consumers would like,” Harig wrote in a press release after the latest CPI report. “Unfortunately, it is likely that food prices will remain elevated in the short term, and we anticipate that there could be further volatility in terms of inflation rising and falling in the coming months. Yet we continue to remain cautiously optimistic that the worst of food price inflation is behind us.”
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Harig continued, “To help consumers stretch their food dollar, grocers have dramatically increased investment in their store brand offerings, among other strategies,” and noted that its survey revealed that consumers spend an average of $151 per week on food, down from the pandemic peak of $161 per week.
The Economic Research Service (ERS) of the U.S. Department of Agriculture (USDA) predicted in January that while food prices will continue to be above historical averages, growth will be slower in 2023 than it was in 2022. According to the ERS analysis published last month, all food costs will increase by 7.1% in 2023, with a projection range of 4.2% to 10.1%. The ERS forecasts an 8% increase in food-at-home prices in 2023, ranging from 4.5% to 11.7%.
FAQs
Is CPI Inflation?
The Consumer Price Index measures the overall change in consumer prices based on a representative basket of goods and services over time. The CPI is the most widely used measure of inflation, closely followed by policymakers, financial markets, businesses, and consumers.
What Is The Inflation Report For January 2023?
The annual inflation rate in the U.S. slowed only slightly to 6.4% in January of 2023 from 6.5% in December, less than market forecasts of 6.2%. Still, it is the lowest reading since October 2021.
What Is The Expected CPI?
The consumer Price Index CPI in the United States is expected to be 304.75 points by the end of this quarter, according to Trading Economics global macro models and analysts’ expectations.
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