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Finally, some good news about grocery prices.
For the first time since the start of record-high inflation two years ago, the increase in food prices showed signs of easing.
Food was 8.5% more expensive in March than a year ago, down from a reading of 9.5% in February, according to the latest government data released Wednesday. Annual food inflation reached a peak of 11.4% last summer.
Grocery prices were up 8.4% in March over the previous year, down from a reading of 10.2% in February. The price of food eaten away from home rose 8.8% in March over the previous year, compared with 8.4% in February.
The consumer-price index rose 5% in March compared with a year ago, down from an increase of 6% in February, but it’s still too high for the Federal Reserve’s liking. The Fed has an overall inflation target of 2%.
Manufactured food items saw some of the biggest price increases. Cereal prices rose 13.6% year over year in March, while cookies were 16.6% more expensive in March than a year ago. The price of frozen baked goods rose 16.2% in March over the previous year.
The higher price increase for manufactured goods is partly due to the longer production cycle and more complex supply chain for those items. The biggest chunks of a grocery shopper’s dollar go to the food-processing industry (24.6 cents), retailers (19.9 cents) and wholesalers (14.7 cents).
Russia’s invasion of Ukraine in February 2022 pushed up prices for energy and agricultural products, and the COVID-19 pandemic affected the availability of workers and factories, resulting in labor shortages. Transportation costs also rose in tandem with these events.
The avian flu pushed up the prices of eggs in recent months, but egg inflation has eased as cases of avian flu fell. The price of eggs was 36% higher in March than a year ago, down from 70.1% in January and 55.4% in February.
A dozen large grade A eggs cost $3.44 on average in March, down from $4.21 in February and $4.82 in January, according to government data.
Although inflation is easing, U.S. families are still feeling anxious about their finances.
More than 70% of respondents said inflation hit them hardest in their grocery bill, according to a recent survey by Atlanticus Holdings Corp., a financial technology company. And just over half (51%) of respondents said they felt anxious or stressed about managing their finances.
