The Agriculture Department expects food-at-home prices to rise 2.5% this year, slightly below the twenty year average of 2.6%. By that measure groceries have normalized. Then you look at what is actually in the cart. Beef is up 5.5%. Sugar and sweets, 6.7%. Non-alcoholic beverages, 5.2%, largely because of coffee. The average is calm. The basket is not.

How an Average Hides a Basket

The government tracks fifteen categories of food-at-home spending. This year seven of them are rising faster than their historical average and seven are rising slower. The overall figure is the middle of that spread, weighted by how a statistically typical household shops.

No actual household shops that way. If your grocery run leans on beef, coffee and packaged sweets, your personal inflation rate is running well above the published one. If you buy mostly fresh produce, you are doing better than the headline, because fresh vegetables are up just 1.4% and fresh fruit less than that.

Eggs are the outlier in the other direction, down 27.4% after the price spikes of the past two years finally unwound. That single collapse is doing quiet work holding the overall number down.

Why Beef Keeps Leading

Beef is up 5.5% this year, and that is the good news. In December of last year the category was running at 15%.

The cause is not a shortage this month. It is that the US cattle herd was drawn down during several years of drought, and rebuilding a herd takes years, not quarters. Ranchers who hold back heifers to breed are taking animals out of the near-term supply, which pushes prices up before it eventually brings them down.

Coffee is a similar story with different geography. Weather in the main producing countries has been unkind for several harvests running, and there is no domestic substitute to switch to.

Restaurants Are Not the Escape

Food away from home is expected to rise 3.7%, above its long-term average of 3.5%, and faster than groceries. Restaurants carry labor and rent on top of ingredients, and those have not gotten cheaper.

For once the cheaper option and the obvious option are the same one, which is not usually how this works.

Final Take

The practical response is not to spend less on food. It is to notice which specific lines moved.

If beef is a regular purchase, the categories that did not inflate are worth a look: eggs are down more than a quarter, fresh vegetables barely moved, and chicken and pork have been far tamer than beef. Substituting two dinners a week is not a lifestyle change, and on a typical grocery budget it covers most of what the beef category took.

The headline says food inflation is normal this year. For plenty of households it is not, and the difference is entirely about what you happen to buy.

Written by Deniss Slinkins
Millionaire Core