Food inflation is the rate at which the prices of food items increase. Inflation, in general, is a rise in prices for goods and services, which means that when inflation goes up, the purchasing power of money decreases. Food inflation affects the type, quantity, and quality of foods served at establishments and how much operators are willing to spend. The cost of living increases as food prices increase, and this affects the median income compared to food costs.

The Consumer Price Index (CPI) is a measure of economy-wide inflation, and it tracks the change in average price that consumers pay for goods and services, including food. The CPI for all food increased by 0.2 percent from July 2023 to August 2023, and food prices were 4.3 percent higher than in August 2022. The level of food price inflation varies depending on whether the food was purchased for consumption at home or away from home. The food-at-home (grocery store or supermarket food purchases) CPI increased 0.4 percent from June 2023 to July 2023 and was 3.6 percent higher than July 2022. The food-away-from-home (restaurant purchases) CPI increased 0.2 percent in July 2023 and was 7.1 percent higher than July 2022.

Food prices have been rising due to several factors, including inflation, global disruptions to the food supply chain, and COVID-19. COVID-19 caused disruptions across the food supply chain, and as U.S. households shifted away from full-service restaurant meals, they purchased more food at grocery stores. There were slowdowns in production at meat processing plants when workers became sick and plants shut down, and transportation of food was bottlenecked when truck drivers got sick.

However, the latest data shows that the cost of groceries is not rising as fast as it once was, and inflation has been slowing in the past year. The annual inflation rate has been declining, and the index for food at home (groceries) is 3.0% higher year-over-year.