After two years of historic inflation, prices are finally showing signs of cooling off, with last month's inflation rate the lowest since 2021. But there's one notable exception to this price relief: the supermarket. Grocery prices rose again last month, after two months of declines gave some shoppers hope. Turns out, that was false hope. "I'm not holding my breath just yet on prices coming down," says Hank Lewis, economist at Lone Star College. "Because there are a lot of factors involved that are going to probably keep prices high in the grocery industry over the next year or so."
The biggest of those factors is the cost of labor. "We're seeing wage rates are finally rising at a good clip, but those labor costs have to be passed on partially to the consumer," says Lewis. "They're assumed by the business, but they're partly shared by the consumer via higher prices."
Another factor squeezing grocery shoppers is 'shrinkflation.' "For a while now, they've actually been slightly shrinking the package size, or putting less in the package and charging the same price...which is effectively a price increase," Lewis tells KTRH.
Above all, Lewis believes there are two simple reasons why grocery prices will remain elevated---we've gotten used to paying higher prices, and the stores have gotten used to charging them. "During difficult times, grocery stores tend to become more profitable because people eat out less," he says. "And they're getting used to those profits, so they may not be shrinking prices for a while yet."
Photo: Tetra images RF