Grocery prices continue to blow a hole in household budgets, with many Americans citing the economy and inflation as top issues behind their voices in the November 5 elections. But there are signs that consumers could soon get a discount on their grocery bills, with some food prices falling in October from a year earlier – the first fall in four years.
Online grocery prices fell 0.1% in October from a year ago — the first decline since January 2020, before the pandemic shuttered the U.S. economy and sent inflation soaring, according to new data from Adobe’s Adobe Digital Price Index (DPI), which tracks prices online.
Online grocery prices represent what consumers pay when they order food from retailers like Walmart, Whole Foods and others through apps or websites.
To be fair, online grocery shopping represents only a portion of total U.S. food purchases, with approximately 20% of U.S. consumers purchasing their groceries through an app or website by 2022, according to the U.S. Department of Agriculture. But October’s price drop signals that shoppers could get more relief in the supermarket aisles, with a Credit Karma survey in May finding that about a quarter of Americans had skipped a meal because of food costs.
Broader grocery inflation has also cooled after hitting a pandemic-era peak of 13.5% in August 2022. In September, the cost of food consumed at home rose 1.3%, below the Federal Reserve’s target of reducing inflation to 2% annually. rate. And grocery prices could remain relatively flat through 2025, with the USDA predicting home food costs will rise just 1.6% next year.
More broadly, online prices across all product categories fell 2.9% in October from a year earlier, Adobe said. The decline was driven by price declines for clothing and toys, which fell by around 10% and 4% respectively.
What to expect in the next CPI report
The consumer price index for October will be released on November 13, with economists forecasting that inflation rose 2.6% on an annual basis last month, according to economists polled by FactSet. That would reflect an uptick from September 2.4% rate but a sharp decline from a year ago, when US prices were still rising at an annual rate of 3.2%.
As inflation declines, so has the Federal Reserve lowered its benchmark interest ratewith economists predicting an additional rate cut at the central bank meeting in December.
