In July, food prices in the United States continued to moderate, as costs for eggs, milk, and chicken declined. However, overall costs saw a slight increase, highlighting the persistent pressure on prices. According to data from the Bureau of Labor Statistics, the cost of food rose by 0.2 percent in July, up from 0.1 percent in June.
Grocery prices experienced a 0.3 percent increase in July, compared to the previous month when prices remained flat. The cost of eating at restaurants also continued to rise, but at a slower pace of 0.2 percent, down from 0.4 percent in June.
While food inflation has slowed in recent months, providing relief to grocery shoppers, prices are still significantly higher compared to a year ago. Moreover, costs have been increasing at a faster rate than normal. In the year leading up to July, food prices rose by 4.9 percent, slightly lower than the 5.7 percent increase in June.
Prices for fruits and vegetables saw a cooling trend in July, with a 0.4 percent increase compared to a 0.8 percent increase in June. Meanwhile, the cost of meats, poultry, fish, and eggs rose by 0.5 percent in July, a rebound from the 0.4 percent decline in June.
Egg prices, in particular, continued to fall after a surge earlier this year due to an outbreak of bird flu and other factors. In July, egg prices dropped by 2.2 percent compared to the previous month, following a 7.3 percent decline in June.
Although some economists foresee food inflation continuing to moderate in the coming months, they also acknowledge the existence of potential risks. Diane Swonk, the chief economist at KPMG, attributed the recent cooling in food price increases to the relief of earlier supply shocks and lower fuel prices, which have contributed to reduced transportation costs.
However, Swonk cautioned that various factors could still put pressure on food prices. These include the damage caused by extreme heat on crop yields and the collapse of the Ukraine grain deal. Jerome H. Powell, chair of the Federal Reserve, stated in a late July news conference that he did not expect the subsequent rise in grain prices to have a significant impact on U.S. inflation but emphasized that officials would closely monitor the situation.
Despite the slower pace of price increases compared to a year ago, many consumers still struggle to afford higher food costs. Swonk noted that even with wages now exceeding inflation rates for the first time since the pandemic began, prices remain too high for some individuals.