CPI Insights and What’s Ahead for Grocers in 2025

The Consumer Price Index (CPI) increased by 0.3% in November, with food prices continuing to rise. The food at home index climbed 0.5%, driven by significant increases in meats, poultry, fish, and eggs (+1.7%), including beef (+3.1%) and eggs (+8.2%). Nonalcoholic beverages also rose 1.5%, while fruits and vegetables increased 0.2%. However, cereals and bakery products saw a historic 1.1% decline, presenting an opportunity for promotions in this category. Over the last 12 months, food at home rose 1.6%, with meats, poultry, fish, and eggs leading at 3.8%.

Looking ahead, in the recently released Circana Compass, Circana projects 2025 dollar sales in the food and beverage industry to grow by 2-4%, driven by modest base price inflation and stabilized promotional activity. Volume growth is expected to remain flat or rise by up to 1%, with at-home meal occasions remaining strong while food service traffic improves as more employees return to offices.

Economic conditions will be a key driver. A moderate slowdown in GDP, disposable income, and the job market could reinforce in-home meal preferences while limiting consumer willingness to pay for premium products. Conversely, stronger-than-expected conditions may boost dining out and demand for premium experiences, pressuring volume growth.

For independent grocers, balancing value and premium offerings will be crucial as consumers seek affordability without sacrificing quality. Monitoring potential policy changes, like immigration legislation and tariffs, will also be essential to navigate their impact on costs and supply chains. Strategic planning and flexibility will help grocers adapt to these evolving trends in 2025.

Sources:
Bureau of Labor Statistics
Cicana