The news: US grocery prices rose 0.7% MoM in December, the fastest pace since October 2022, per the Bureau of Labor Statistics. That was a significant acceleration from the 0.2% gain in September, the last report on MoM inflation before the government shutdown disrupted data publication.

• Compared with a year earlier, grocery prices increased 2.4%, with notable jumps in the cost of staples such as bananas (up 5.9% YoY), beef and veal (up 16.4% YoY), and coffee (up 19.8%).
• The jump in food prices stood out in an otherwise steady CPI report. Overall inflation rose 2.7% YoY, unchanged from November and in line with expectations. Core inflation edged up 2.6%, also unchanged and below the 2.8% economists expected.

Why it matters: Grocery prices are highly salient to consumers—86% of US adults say grocery prices cause them stress—a concern that is amplified by inflation headlines and renewed trade uncertainty, including President Donald Trump’s recent threat to impose 25% tariffs on countries that do business with Iran. That backdrop helps explain why 30% of Americans cited inflation and prices as their top concern in a January YouGov poll, the highest share since the option was added in July 2022.

Perceptions that rising prices are eroding purchasing power shape spending patterns. Consumers became more price-conscious last year, favoring smaller-ticket discretionary purchases over higher-cost goods and services, according to the Bank of America Institute.

Implications for retailers: Consumers’ sharp focus on value is unlikely to fade anytime soon, increasing the need for retailers to lean into value through pricing, promotions, and assortment. That includes clear, highly visible value signals in stores and online—such as straightforward discounts like “25% off,” so-called “everyday low prices” on staples, or prominently labeled “under $5” sections—as well as affordable trade-down options that help shoppers stretch their budgets.