The news: The increasing cost of food was a key factor that drove prices to rise 8.6% year-over-year (YoY) in May, and 1.0% month-over-month (MoM), per the US Bureau of Labor Statistics.
- Food prices were up 10.1% YoY and 1.2% MoM.
- Grocery prices soared to 11.9% YoY, the highest level since April 1979, and 1.4% MoM. May was the fifth straight month that the MoM increase was at least 1%.
- Restaurant prices rose 7.4% YoY, and 0.7% MoM.
- Online grocery prices surged 11.7% YoY, the most on record, and 1.3% MoM, per the Adobe Digital Price Index. That increase was an anomaly, as overall price growth for online goods in the US decelerated in May for a second straight month.
Feeling the impact: About 90% of US consumers are concerned about food prices, according to a survey conducted by The Harris Poll on behalf of Alpha Foods reported on by CNBC.
- In part that’s because consumers are feeling the impact of soaring inflation and a declining stock market, as US household wealth fell for the first time since Q1 2020, according to the US Federal Reserve.
- The situation helped drive down US consumer sentiment in early June to the lowest on record, according to The University of Michigan’s preliminary June sentiment index.
A shift in spending: Many US consumers have begun to change both where and how they shop for groceries, as well as what they buy.
- 45% of consumers are trading down to generic brands and 33% are buying in bulk, according to The Harris Poll.
- 46% of shoppers are purchasing more food and groceries at stores with lower prices and 43% are buying more items on sale, per a survey conducted by The Feedback Group.
- Those results dovetail with a May First Insight survey that found 41% of consumers are cutting back on name brands in many categories due to inflation.