If you’ve looked at recent inflation headlines and then looked at your grocery receipt, you may have experienced a disconnect.
Officially, grocery inflation, while certainly elevated, isn’t seeing particularly alarming moves at the moment.
According to the latest Consumer Price Index report, the “food at home” category – the government’s measure of grocery-store prices – rose just 0.1% in May and is up 2.7% over the past year. That’s well below the inflation spikes consumers endured in 2022 and 2023.
So why do so many shoppers still feel like groceries are getting more expensive?
The answer is that consumers don’t experience inflation the way economists measure it.
First, shoppers tend to remember cumulative price increases, not annual rates of change. While grocery inflation has moderated, prices remain dramatically higher than they were before the inflation surge earlier this decade. Many staple items are still being purchased at price levels consumers would have considered shocking just a few years ago.
Second, consumers buy categories that are still seeing meaningful increases. Fruits and vegetables are up 6.1% over the past year, while nonalcoholic beverages have risen 5.8%. Even if overall grocery inflation remains relatively tame, shoppers notice price increases on the products they purchase most frequently.
Third, consumers don’t separate grocery costs from the rest of their household budgets.
Headline inflation climbed to 4.2% in May, driven largely by energy prices. Gasoline prices are up more than 40% year-over-year, while overall energy costs have risen 23.5%. Those increases affect how consumers feel about every purchase they make, including groceries.
There’s also a psychological component at work.
Consumers tend to notice increases far more than decreases. When eggs, beef, produce, or beverages rise sharply, shoppers remember it. When dairy prices decline or stabilize, the impact is less noticeable. In fact, dairy prices were down 1.0% over the past year, but few consumers are likely to describe grocery prices as “falling.”
Meanwhile, restaurant inflation remains elevated. Food away from home rose 3.5% over the past year, reinforcing the perception that food costs generally remain under pressure.
For supermarket operators, the takeaway is straightforward.
The conversation has moved beyond inflation rates and into price memory. Consumers aren’t comparing today’s prices with last month. They’re comparing them with what they paid several years ago.
That means value communication, private label, promotions, meal solutions, and clear price leadership remain critically important – even as official food inflation begins to cool. The data may say grocery inflation is relatively modest. Many shoppers, however, are still living with the accumulated effects of years of higher food prices.
