Why We Can Have Low Inflation and High Grocery Prices

Grocery shoppers usually blame inflation for high food prices. However, the Consumer Price Index has descended from a 9.1% 12-month pop during June 2022 to a January 2025 3.0% rate.

Rather than inflation, people are actually angry about the prices that serve as their reference points. Thinking of orange juice, bacon, and eggs, shoppers remember a price from several years ago.

Price Changes

For eggs though, it was last month! The average price for one dozen eggs raced past $7.00 while on January 18, they were “just” $5.54.

Below you can see one year’s change in grocery prices:

However, looking back 6 years (from 2019 to the end of December 2024) might better explain consumer anger:

Inflation Changes

Whereas on a graph, we would see the price of individual items rising, for inflation, the line plunges. The reason? Accurately measuring recent inflation, we cite the diminishing rate that a basket of prices has increased. When prices go up more slowly, the rate of inflation goes down:

Our Bottom Line: Inflation

Many economics books would tell you that we can have demand pull, cost push, or a single cause of inflation. Demand pull refers to too many dollars chasing too few goods while cost push focuses on land, labor, and /or capital rising in price. Meanwhile, we’ve seen inflation surge because oil prices have gone up or government spent much more during Covid. Then to all of this, we can add the monetarists that say inflation is all about the money supply and nothing else. When too many dollars circulate, prices rise.

So, where are we? Normal people and economists perceive the supermarket cash register differently. When consumers pay more, they blame inflation. However, as economists we know that prices rise when inflation sinks.

My sources and more: CBS News was one of many possibilities for tracking grocery prices (though it was tough to find current data). In addition,  Nerdwallet came in handy and, of course, the BLS.