Egg prices fell 2.7% in May to headline a month that saw grocery inflation rise from the prior month but continue to moderate as consumers search for relief from high food prices, which have weighed on household budgets for years.
Food at home prices have now increased by less than 0.5% each month since October 2022, and monthly grocery inflation was below this threshold just once between June 2021 and October 2022.
Wednesday’s Consumer Price Index report showed that the index for food at home rose 0.3% last month, a rebound after recording a 0.4% drop in April to mark the largest monthly decline since 2020. May also marked the 27th straight month that inflation for food at home was below inflation for food away from home, per JPMorgan analyst Ken Goldman.
Half of the major grocery store food groups saw an increase in April, and the other half saw a decline, reversing the downturn consumers saw across five categories in the prior month.
In May’s CPI Report from the Bureau of Labor Statistics, inflation overall grew 2.4% on a yearly basis, in line with expectations, and 0.2% month over month.
Read more: What is inflation, and how does it affect you?
Wells Fargo economist Michael Swanson told Yahoo Finance that Wednesday’s data shows grocery inflation slowing. Proteins were the “only” category “you could really point to as being problematic for the consumer,” Swanson said.
The index for meats, poultry, fish, and eggs fell 0.4% in May, but it’s up 6.1% from the prior year. Egg prices, though off record highs reached earlier this year, are still up over 40% from a year ago.
The impacts of tariffs have also been uneven across the grocery category, creating uncertainty for grocers and consumers in the months ahead.
Consumers “stocked up extra hard in February and March” on eggs, Swanson said. But since then, supermarkets have seen “softer demand,” as shoppers aren’t buying ahead or buying multiple cartons.
Costco (COST) CEO Ron Vachris told investors the wholesale retailer was able to maintain its “competitive price position” by working with suppliers to lower prices on key items like eggs, butter, and olive oil, which helped lift sales of other fresh items and food.
Read more: How to protect your savings against inflation
As a 25% tariff on aluminum went into effect, which then turned into 50% in early June, inflation hit canned fruits and vegetables, with prices increasing 1.9% in May.
Roasted coffee, already hit by commodity inflation, also felt the brunt of tariffs on imports, with prices rising 1.8% last month. On Wednesday, J.M. Smucker (SJM) CFO Tucker Marshall told investors it was raising prices “across the entire coffee portfolio.”
“Those actions came early Q1 and will also come in early Q2,” he said, adding that they “not only cover green coffee commodity inflation, but also support recovering tariffs associated with our green coffee.”
Swanson said coffee is a small part of the everyday consumer’s budget, but these higher prices could mean bigger problems for companies like Starbucks (SBUX).
Frozen fish and seafood, which is mostly imported, also saw prices increase 2.9% last month. In a note to clients, TD Cowen said it expects the impacts of tariffs to “become more visible in the June and July data.”
Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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