Food prices (PCE) rose 0.1% from July and 2.8% from a year earlier, driven mostly by supply-side forces, which account for around 71% of the total shock in our model

• Food-at-home prices held flat 0.0% from July (m/m) and were up 2.2% year-over-year (y/y)

  • Grocery prices were essentially flat again in August, extending the recent soft patch. Eggs, fats and oils, other meats, and processed dairy rose, but these were offset by declines in beef, fresh milk, fresh fruits and vegetables, and sugar. The broad picture is one of stabilizing grocery prices after the earlier-year run-up.

  • Grocery inflation cooled further over 12 months. Food-at-home eased to around 2.2% year-over-year (from about 2.7% a month earlier). Beef's annual gain fell further to about 6% (from near 15% in the spring), and eggs' annual decline kept narrowing (about -23%). Sugar and sweets, fish and seafood, and coffee remained the firmer categories.

• Food service prices rose 0.2% from July and 3.3% y/y 

  • Restaurant and other food-service prices rose about 0.2%, steady and uniform across categories, much as in recent months, with school meals again a touch firmer.

  • Food service prices rose around 3.5% over the year. They are still running hotter than groceries annually and steadier month to month, with a broadly similar pace across limited- and full-service meals, school meals, and restaurant alcohol.