Grocery Inflation Index

Impact Analytics Grocery Inflation Index (IA – GII) tracks price movements of key grocery items across the US on a higher frequency than the official Govt reporting. We do this by capturing price information from the major grocers across multiple geographies in the US on a weekly basis. The Index leverages Impact Analytics’ capability to capture a vast amount of publicly available data to generate valuable actionable insights for our clients.

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Grocery, one of the biggest categories in retail, has a 15.6% share in overall retail spending in the US. Grocery is a high-frequency low-margin essential category, and any impact on grocery prices influences discretionary spending. Tracking grocery inflation at a higher frequency than what is released by the Bureau of Labor & Statistics allows us to identify these trends, analyze the impact and share actionable insights with our clients faster.

We have created a basket of the most consumed grocery products in the US, from various categories including fruits and vegetable produce, cereals and bakery products, dairy products, meat, seafood and poultry, frozen foods, deli, beverages, etc. These items were selected based on availability, accessibility, and popularity among consumers.

The different categories in the basket are weighted based on their consumption by the “average” US consumer. For example, if consumers spend approximately 20% of their grocery budget buying dairy products, 20% of the basket used to create the index contains dairy products. The pricing of these products is compared on a weekly basis to get detailed insights into price inflation along with its effects. We have further classified these products into macro-nutrient food groups (protein contributors, carbohydrate contributors, fat contributors), staple food and discretionary food, healthy food and unhealthy food, and plant-based and non-plant-based to help uncover any underlying price trends across each of these groups.

Pricing insights from the recent weeks: Marginal increase seen in prices

After a steep increase of 10% in meats, poultry, fish, and eggs and 6.6% in fruits and vegetables during the early weeks of October, prices stabilized in the later weeks. A minor decrease of 0.62% and 0.66% in product pricing was observed in the early weeks of October in non-alcoholic beverages, beverage materials, and dairy-related products. However, in the later weeks of October, pricing for dairy-related products slightly increased. The remaining categories have shown a marginal increment in prices.

An unprecedented increase in food prices over the past year

Inflation in the overall food-at-home segment (including grocery store and supermarket food purchases) rose by 13% over the previous 12 months, with the largest increase, 16.2% in cereal and bakery products. Dairy and related products and other food at home showed significantly higher inflation than fruits and vegetables, non-alcoholic beverages, and beverage materials. A host of factors such as elevated energy prices, a relatively strong employment market leading to a sustained increase in demand, and the ongoing conflict in Ukraine contributing to supply-side constraints, could help in understanding this rise in inflation levels.

Prices for discretionary plant-based, carbohydrate-rich, and fat-rich products continue to rise faster than other segments

Prices on discretionary food products continued to rise faster than staple products by 0.84% month-over-month (MoM). Among carbohydrate-rich, fat-rich, and protein-rich products, prices for carbohydrate-rich and fat-rich products increased by 1.51% and 1.17% respectively while prices for protein-rich products increased at a slower pace of 0.28%. Growth in prices for healthy products (1.12% MoM) outpaced that of unhealthy products (1.01% MoM) by 0.11%. Plant based and non-plant based product prices increased at 1.31% and 1.01% respectively, which is in line with past trends.

Where food prices are trending based on recent months

Prices have climbed even higher (+0.71% MoM) during late August and the early weeks of September 2022. Fruits and vegetables, along with cereals and bakery products have seen 1.6% and 0.9% price increases respectively MoM, while prices for dairy and related products segments have moderated over the last month.

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