Grocery prices are barely moving

One point eight percent. That is how much more a family paid for groceries in September than a year earlier, according to the Bureau of Labor Statistics. Food at home slipped 0.1% from August.

Then there is the other number. Headline inflation, which counts everything, jumped to 3.7%, because gasoline cost 34.2% more than it did a year ago. Gasoline accounted for more than half of September's 0.6% monthly rise. Both numbers are true, and families feel both.

Think of a house in January. Someone has left the oven door open, and the thermometer in the kitchen reads 85 degrees. Walk down the hall and the bedrooms read 68. If you only checked the kitchen, you would call the furnace man. The furnace is not the main problem; the oven door is open.

Gasoline is the open oven. Before the Iran war began on February 28, headline inflation was 2.4%. It peaked at 4.2% in May as tanker traffic through the Strait of Hormuz stalled, eased to 3.4% by August, and then climbed back to 3.7% in September as pump prices rose again. Regular gas averaged $4.29 on October 25, according to AAA, about $1.23 more than a year ago and a little below where it stood a month earlier.

The rest of the house

I owe you a correction to the version of this story I published earlier this month. Core inflation, which leaves out food and energy, was 2.4% in August, its lowest reading since 2021. In September it rose to 2.6%, and core prices rose 0.3% for the month, faster than forecasters expected. So “lowest since 2021” is no longer true, and I have taken it out of the title.

Nobody should call inflation beaten, and the Federal Reserve is not pretending to. On September 16 it raised interest rates a quarter point, to a range of 3.75% to 4%, and said inflation remains elevated. Pay is not keeping up either: average hourly earnings rose 3.0% over the year, below the 3.7% inflation rate. Shelter rose 3.2%.

Still, the grocery aisle is where the news is good. Food at home rose 2.2% in the year to August and 1.8% in the year to September. That is slower than wages, and it is the price families see most often.

Until the gas spike passes, the grocery number and the core number on the next report are the ones to watch. The thermometer down the hall has crept up a little. The oven door is still open.