Grocery prices rise to highest levels since 1979 amid inflation

Yahoo Finance's Brooke DiPalma breaks down the rise in food and grocery prices.

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AKIKO FUJITA: Well, let's continue the inflation conversation here-- but more specifically, taking a look at food prices. Americans can still expect to pay up on their next trip to the grocery store, as groceries continue to outpace overall inflation. Prices are now seeing their fastest rise since 1979.

Here to break it all down is Yahoo Finance's Brooke DiPalma. Brooke, what are we looking at?

BROOKE DIPALMA: That's right, Akiko. We keep going back to that 1979 year, of course, for the overall food category, up 11.4%. That's the highest increase since May of 1979. But for groceries, specifically, up 13.5%, that's the highest increase since March of 1979.

So each month, it seems like it's beating that more than 40-year high. Of course, from July to August, the cost of groceries increased 0.7% month-over-month. That's lower than recent months, but still not as low as where we were back in December of 2021, only up 0.4%. Akiko, I say only up, but still, that's higher than the month prior.

Now, cereal, this category is impacted by disruptions in grain markets due to the Ukraine war, whereas dairy and related products, keep in mind here, that it's heightened cost of cattle, animal feed, and farm labor that's really taking a toll. In addition to that, when I spoke to Steve Reed-- he's an economist at the Bureau of Labor Statistics-- he told Yahoo Finance that higher prices were in part due to the cost of transportation.

Of course, seeing a bit of relief here. Energy costs decreased by 5% compared to July of 2020. Month-over-month, gasoline down 10.6%, making it a bit cheaper to transport goods. But still, consumers can expect sticker shock when they head to the grocery store next time.

AKIKO FUJITA: Yeah. And Brooke, we just showed that graphic there. I mean, green arrows across the board here. What specifically is driving some of these prices higher?

BROOKE DIPALMA: Yeah. Well, take a look at that. Eggs up 39.8%. This was always a volatile market, but more specifically, it's been a bit more higher in price over the course of the pandemic. Now, if you take a look at milk, that's up 17%. Like I said before, it costs farmers more to feed the cows and also to have labor on their farm.

Coffee, I want to take a look at that. Of course, Akiko, I'd be remiss if I didn't mention Starbucks' biennial Investor Day happening today. That's up 17.6% year-over-year. Down 1% month-over-month. But still, something to keep a look out for, especially when these companies look to recover from the impact of the pandemic and as consumers really head out and make their way to the store.

AKIKO FUJITA: Yeah. 40% hike in eggs. Certainly a steep price to pay there. Brooke DiPalma, as always, thanks so much for that.