If you listen to the speeches coming out of Washington this week, you might think the battle against inflation has been won.
President Trump recently claimed his administration is “crushing” inflation and that prices are “coming down tremendously.” He has specifically pointed to falling egg prices as proof that his economic policies are putting money back in your pocket.
But if you have been to the supermarket in the last week, you know the checkout receipt tells a very different story.
New federal data confirms what your bank account already knows: food prices aren’t dropping. In fact, they just hit a disturbing new milestone.
The record-breaking jump
While the administration takes a victory lap, the Bureau of Labor Statistics just released data showing that grocery prices in December recorded their largest month-to-month increase in more than three years.
The cost of food at home rose 0.7% from November to December. That might sound like a small amount, but in the world of economic data, it is a massive spike. It is more than double the increase we saw just a few months prior.
This contradicts the narrative that prices are deflating. While the rate of inflation has been cooling, this new data suggests the price tag on your weekly shop is heating up again.
The truth about eggs
To give credit where it’s due, the President is mathematically correct about one specific item: eggs.
After hitting record highs, egg prices plummeted 8.2% in December. This sharp drop is the main reason the “meats, poultry, fish, and eggs” category looked better on paper.
However, relying on egg prices to gauge your total food bill is dangerous. While eggs are down, almost every other aisle in the store is getting more expensive.
Where you are losing money
The savings you made on omelets were likely wiped out by the rest of your cart. The price hikes were broad and aggressive across most major categories:
- “Other” foods: This catch-all category, which includes fats, oils, and prepared foods, surged 1.6% in a single month.
- Dairy: Milk, cheese, and related products jumped 0.9%.
- Beverages: Nonalcoholic drinks are up 5.1% compared to this time last year.
- Cereals and bakery: These staples rose 0.6% in December.
Even dining out offers no escape. Restaurant prices climbed 0.7% in December and are up 4.1% over the last year.
How to protect your wallet
The government data suggests this “sticky” inflation isn’t going away overnight. Waiting for political promises to lower prices is not a financial strategy. You need to defend your budget now.
First, stop being loyal to brands that aren’t loyal to you. The “other food” category is rising fastest, so this is the place to ruthlessly swap famous labels for store brands. The difference in taste is often negligible, but the difference in price can be 20% or more.
Second, pivot your diet toward the few deflationary categories. With beef prices up and eggs down, it makes financial sense to swap that steak dinner for a frittata.
Finally, ignore the headlines and watch the unit price. When costs rise, manufacturers often shrink the package size rather than raising the sticker price. Shopping by unit price is the only way to catch this hidden 33% price hike on items like chips or cereal.
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