We just got the clearest sign yet that grocery price increases are slowing down
- Food inflation is slowing down heading into 2024, according to the largest supermarket chain in the US.
- Executives at Kroger said they expect food inflation "in the low single-digits'" in the new year.
Grocery price increases are finally starting to slow down, according to the largest supermarket chain in the US.
Kroger expects "near-term economic pressures and food-at-home disinflation" to affect its results for the rest of its fiscal year, the grocer said in its third-quarter earnings published Thursday. Kroger's fiscal year extends into early 2024.
"Most of the data that we're seeing would point toward a typical year next year," CFO Gary Millerchip said on a call with analysts after Kroger released its earnings. Kroger expects food inflation "in the low-single-digit range" going into 2024, Millerchip added.
That represents a slowdown from the previous two years when inflation for food and various other goods was historically high. Food inflation peaked over the last two years in June 2022, when federal data showed prices rising 9%.
Inflation has slowed down since then, though rates vary between different products. Prices for many shelf-stable products are still rising at a rate of 7%, according to a study from Bank of America published Thursday. Meanwhile, prices for other products, such as produce and dairy, have started falling, according to the study, which looked at a variety of retailers in Nashville, Tennessee.
For budget-conscious consumers, Kroger has offered promotions such as a Thanksgiving meal bundle that can serve 10 people "for less than $5 per person," CEO Rodney McMullen said.
Walmart is also expecting relief from food inflation, CEO Doug McMillon said earlier this month. "We think we may see dry grocery and consumables start to deflate in the coming weeks and months," he said during the company's latest earnings call.
A slowing inflation rate is causing some economists to say the US economy can limit price increases on the goods that consumers buy while also avoiding a recession or spike in unemployment. Some economists call the phenomenon "immaculate disinflation."
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