Economic Tidbits

Inflation Moderates – Do Consumers Notice?

The U.S. Bureau of Labor Statistics reports the U.S. inflation rate in January was 3.1 percent, down considerably from a year ago when it was 6 percent. The good news extends to food inflation too. Food prices overall were up 2.6 percent over the past 12 months and food consumed at home was up just 1.2 percent, the lowest year-over-year increase since June 2021 according to the Daily Livestock Report. Cost for food consumed away from home, though, outpaced other food prices, up 5.1 percent. Figure 2 shows the latest inflation data for several food items.

Yet despite slowing inflation, low unemployment, and strong economic growth, most Americans feel the economy is performing poorly. A closer look at inflation since 2020 might reveal why. The Daily Livestock Report says grocery prices in January were 26 percent higher compared to prices in January 2020. Prices at limited-service restaurants were 30 percent higher and 24 percent more at full-service restaurants. Meat proteins have seen similar increases: retail beef prices were up 31 percent; pork prices were 22 percent higher; and chicken prices were 32 percent higher.

Every time a consumer walks into a grocery store or restaurant they are reminded of the price inflation which has occurred over the past three years. And while the economy continues to perform well, and has thus far avoided a recession, consumers are not liking the price hikes. Time and continued wage growth are needed for consumers to feel more financially secure and more positive towards the economy.

FIGURE 2. ANNUAL INFLATION RATES, FEBRUARY 2024

Source: U.S. Bureau of Labor Statistics

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