August 3, 2023



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Grocery price inflation reached a new 44-year low in June & the rate of CPI increase reached a new low

In its monthly inflation report, the US Bureau of Labor Statistics stated that the Consumer Price Index (CPI) rose 3% in June compared to 12 months ago, marking the smallest increase since March 2021.

Throughout June's CPI and inflation report, several indicators hit near five-year lows, with grocery price inflation experiencing the largest decrease in 44 years. Some economists have mentioned that "the slowdown in inflation is visible and there are also encouraging signs for the future."

In June, overall inflation also significantly decelerated to the lowest level in over two years, with the overall inflation rate dropping to 3%, the lowest year-on-year rate since March 2021 when it was only 2.6%.

Price decreases in categories such as energy, groceries, and housing provided some relief to the general consumers' wallets. Grocery price inflation has also seen a significant drop from its peak of around 14% last summer, reaching the highest level since 1979.

In June, family food prices rose 4.7% year-on-year, lower than the previous month's 5.8%. The family food index remained stable compared to May, which saw a slight increase of 0.1%.

Last month's sharp decline in grocery inflation contrasted sharply with the high-speed increase seen the previous year when it reached an astonishing 13.5%.

In June, the family food index rose by 4.7% year-on-year, marking the slowest grocery price increase since September 2021 (when it was 4.5%). In that month, the index surged 1.5 percentage points to 4.5% compared to August 2021, marking the beginning of a rising trend in family food prices.

Although grocery inflation has generally slowed down, some product categories in June still saw significant price increases compared to the same period last year, reminding consumers that while overall inflation is stabilizing, they are still facing higher bills for key commodities.

According to the US Bureau of Labor Statistics, in June, the prices of cereals and bakery products surged at an annual rate of 8.8%, with flour and prepared flour mixtures, bread, and cookies leading the price increases, reaching rare double-digit percentages. The prices of non-alcoholic beverages and beverage ingredients increased rapidly at a rate of 7.6%.

In June, dairy and related product prices rose only 2.7% year-on-year, with milk prices declining by 1.9%. Fresh produce prices increased by 1.1%, with apple prices rising by 4.5%.

Meanwhile, the inflation rates for meat, poultry, fish, and eggs slightly decreased by 0.2% in June, following a slight increase in May. According to data from the Bureau of Labor Statistics, egg prices, which were making headlines for their surge last year, declined by 7.9%, while bacon and related product prices dropped by 10.1%.