Food Price Inflation Outlook More Stable

November food inflation increased at the slowest rate, +0.3% compared to October, according to IRI’s new report, November 2022 Price Check: Tracking Retail Food and Beverage Inflation. The study offers new insights into food inflation and its impact on consumer shopping behavior.

This increase is less than the 0.5% jump in October compared to September. The report leverages point-of-sale data for November 2022 and includes data across U.S. food channels, including grocery, drug, mass market, military commissaries, and select club and dollar stores, as well as e-commerce.

Overall food inflation grew 13.2% versus one year ago; however, monthly increases compared to one year ago have leveled off over the last four months.

IRI’s analysis indicates that consumers are continuing to employ a range of strategies to reduce spending, such as switching to private labels, trading out of expensive food categories, trading down to mainstream and value brands, and consuming more at versus away from home.

Related Article: US Consumer Confidence Declined Again in November

“The pace of food inflation is leveling off but remains at a robust 13% level versus one year ago,” said Krishnakumar (KK) Davey, president of Thought Leadership for CPG and Retail, IRI and NPD. “IRI anticipates consumers will continue their trading down behavior over the December holidays and into the new year. However, in some segments, consumers will splurge to celebrate the holidays. Retailers and manufacturers with an in-depth understanding of consumer strategies have an excellent opportunity to build loyalty by offering products, price points, and package sizes that provide good value.”

Key insights from the November 2022 inflation report:

  • Within the store, inflation has moderated. Perimeter areas, including produce and deli, have seen inflation moderate to 8.2% versus one year ago. In contrast, inflation within center store, which includes snacks, frozen meals, and other frozen foods, has leveled off in November at 14.9% versus one year ago.
  • Several product categories enjoyed price declines in November versus October. Categories with the largest month-over-month price decreases included root vegetables (-7.2%), bacon (-3.4%), butter/margarine/spreads (-2.0%), and chocolate candy (-2.0%).
  • Inflation varied significantly across the store. Fresh meat and seafood, and beverage alcohol segments rose just 4.3% versus October and 6.3% versus one year ago. However, other categories rose dramatically, such as dairy (+23.4%) and bakery (+18.4%).
  • Food inflation did not diminish Thanksgiving celebrations for most American households. Inflation for the typical Thanksgiving meal was up 14.2% versus one year ago, driven by pies (+16.6%), side dishes (+17.8%), and baking (+17.4%), while main dishes were up 11.8% versus one year ago. Thanksgiving volume sales saw an uplift in 2022 of 72% (versus pre-Thanksgiving weeks), an increase of 6 percentage points versus year-ago Thanksgiving, suggesting that overall, Thanksgiving celebrations were not impacted by inflation. Approximately 44% of Thanksgiving sales were sold on deal, which is similar to 2021. Fifty percent of main dishes and 54% of pies sales were sold on promotions.