Food prices fall amid weak inflation

Food prices fall amid weak inflation
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The price of food fell a seasonally adjusted 0.4 percent in July, the first monthly drop in food prices since last April, according to the Commerce Department.

The retreat will be a welcome turnaround for consumers after the price of food at home, in particular, spiked in the early days of the pandemic, rising 2.6 percent in April, 1 percent in May and 0.7 percent in June before dropping 1.1 percent in July.

All in all, the price of food remains an unadjusted 4.1 percent higher since last year.


Cailin Birch, global economist at The Economist Intelligence Unit, said the drop was "notable."

"This implies slightly softer demand, as demand for food out of the home increases; it may also imply that some food supply-chain disruption related to COVID-19 containment efforts is easing," she said.

The latest consumer price figures also showed a return to weak inflation, with a seasonally adjusted 0.6 percent increase in July, bringing the unadjusted total for the year to 1 percent. Prices had largely fallen in March, April and May as the pandemic sapped demand from the economy.

Birch said the data shows the U.S. has a long way to go in its recovery.

"Overall, we continue to expect headline inflation to remain muted in 2020, at an annual average of 0.7%, as the recovery in consumer demand fails to meet market expectations in the second half of 2020," she said.