Grocery prices continue to eat a hole in household budgets, with many Americans citing the economy and inflation as top issues behind their votes in the November 5 election. But there are signs that consumers may soon get a break on their grocery bills, with some food prices falling in October from a year earlier — the first decline in four years.
Online grocery prices dipped 0.1% in October from a year — that marks the first dip 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 online prices.
Online grocery prices represent what consumers pay when they order food from retailers such as Walmart, Whole Foods and others through apps or websites.
To be sure, online grocery shopping represents only a portion of Americans’ overall food purchases, with about 20% of U.S. shoppers buying their provisions through an app or website in 2022, according to the U.S. Department of Agriculture. But the October price decline signasl that shoppers could get more relief ahead in the grocery aisles, with a Credit Karma survey in May finding that about one-quarter of Americans had skipped a meal due to food costs.
Grocery inflation more broadly has also cooled after hitting a pandemic-era peak of 13.5% in August 2022. In September, the cost of food that consume at home rose 1.3%, below the Federal Reserve’s goal of driving inflation down to a 2% annual rate. And grocery prices may remain relatively flat in 2025, with the USDA projecting that food-at-home costs will increase only 1.6% next year.
More broadly, online prices across all product categories dropped 2.9% in October from a year earlier, Adobe said. The decline was led by drops in prices for clothing and toys, which fell about 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 at an annual rate of 2.6% last month, according to economists surveyed by FactSet. That would reflect an uptick from September’s 2.4% rate but a sharp decline from a year ago, when U.S. prices were still rising at a an annual rate of 3.2%.
With inflation easing, the Federal Reserve has cut its benchmark interest rate, with economists forecasting an additional rate reduction at the central bank’s December meeting.