Consumers continue to see higher prices for everyday groceries, and they could face higher candy costs this Halloween.
The cost of groceries increased 1.3% year over year in September and 0.4% month over month, according to the latest Consumer Price Index report. Prices rose slightly more than the 0.9% year-over-year increase in August.
Five out of the six food groups the Bureau of Labor Statistics monitors saw price increases from August to September. Food at home inflation was led by the meats, poultry, fish, and eggs category, which saw a 0.8% increase compared to the month prior.
Egg prices, in particular, climbed 8.4% on a monthly basis and were up a whopping 39.6% compared to September of last year.
Cereal and bakery products also grew 0.3% month over month, led by higher prices for rice, pasta, and cornmeal, up 1.3%, along with increases for cakes, cupcakes, and cookies, up 1.2%.
Fruit and vegetables also saw a 0.9% monthly increase, led by the cost of citrus fruits, which was up 1.9%. This jump comes after a 0.2% monthly decline in August, and higher prices will likely stick around after Florida orange groves were hit by extreme weather.
“The orange groves down there obviously got flooded,” Stew Leonard Jr., CEO of Stew Leonard’s, told Yahoo Finance. “They said it wasn’t as bad as they thought it was, but still, there’s going to be a little supply disruption.”
Leonard said other factors driving prices higher include the cost of labor, the port strike, and the ongoing war in Ukraine. But he’s optimistic that prices are “leveling out” ahead of the holidays.
Overall food prices, including the cost to dine at restaurants and bars, rose 2.3%, pulled higher by the 3.9% increase in the cost of dining away from home.
Read more: Here’s where prices are easing up as inflation cooldown continues
Will Restaurants Investment Group founder and CEO Brian Will told Yahoo Finance’s Morning Brief that the cost of “everything” for restaurants, including rent, utilities, maintenance, labor, and food inputs, seems to be rising, causing them to raise menu prices. But it’s a careful balance, he said, because “[we] can only raise our prices so much before people stop coming in.”
Halloween candy prices are up, but shoppers are still willing to splurge
Many consumers are adding Halloween candy to their grocery budget this month and keeping an eye on the cost of their coveted Reese’s, Snickers, and Milky Way bars.
Prices for sugar and sweets increased 0.8% on a yearly basis, boosted by sugar and sugar substitutes, which were up 3.3% from last year, while candy and chewing gum increased just 0.3%. On a monthly basis, the category is down 0.7%.
While the CPI print showed signs of relief, rising cocoa prices could still drive candy prices higher. Year to date, the price of cocoa futures (CC=F) has nearly doubled as the result of the El Niño climate pattern, which led to a lower supply of cocoa production, David Branch of Wells Fargo said.
Crop production is down 14.2% on an annual basis for the 2023-2024 crop year, he said, resulting in a 405,000 metric ton deficit and bringing the total global cocoa supply deficit to 462,000 metric tons.
Branch said candy makers have worked around this by adding “more filler” to candy.
“Your pure chocolate candies probably have gotten smaller or [there] is going to be less produced,” he said. Candies that already have other ingredients like almonds are likely to have more too, since it’ll be “a lot cheaper than the cocoa.”
Branch pointed out that consumer packaged goods companies are also offering different shapes of candy or gummy offerings to keep prices lower.
Yet, consumers are expected to spend $3.5 billion on candy alone this year, according to a report from the National Retail Federation.
“We’ll see new record spending, despite the fact that consumers are reasonably tightening their belts for fear of recession and managing inflation,” Andy Keenan at Advantage Solutions told Yahoo Finance. Keenan noted that as consumers lean into the nostalgia of the spooky holiday, “they want to buy the candy they had as a kid and indulge in it and share it with their family and friends.”
He added that these sort of celebrations have created an “expectation” to indulge, even though prices are higher. To compensate, shoppers are looking for value at retailers like Costco (COST) and Walmart (WMT), he said.
Furthermore, some 7 in 10 consumers will wait until the week of Halloween to be sure they’re getting the best deal, an Advantage Solutions survey found.
“There is still a perception that the best prices are right before — that you will do better if you buy just before the holiday,” Keenan said. “That’s not always the case,” he continued, as retailers are now promoting deals and lower prices even earlier.
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at [email protected].
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