Food Inflation Versus CPI

Much has been made lately regarding food inflation and the lack of impact on the Consumer Price Index. In large part, the reason for this is due to the fact, in the U.S., the food component in CPI is a much smaller weighting than in developing countries around the globe.

From HORAN Capital Advisors

Source: Fidelity (page 20)

Below is a chart of the CRB Spot Foodstuffs Index and the U.S. Consumer Price Index. As the 20-year chart shows, although the Foodstuffs Index is up over 40% on a YOY basis and CPI is up 3.1%, the two indexes are tracking closely. Several of the component's of the Foodstuffs Index are butter, cocoa, corn and hogs. And, although we are seeing food price inflation, it represents a smaller weighting within the CPI, for example, butter is only .067% of the consumer price index.

From HORAN Capital Advisors