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The Consumer Price Index report for June indicated a 3.3% year-over-year increase in the core rate, compared with the +3.5% pace expected by economists and the +3.4% level seen in May.
The closely watched food category was up 2.2% year-over-year in June, with food away from home up 4.1% during the month and food at home up just 1.1%. The pace of inflation for food at home has now been below the Federal Reserve’s overall target rate of 2% for eight straight months, although the overall level of food prices is still elevated compared to two and three years ago.
Categories showing notable moderating or declining year-over-year inflation included rice (-2.4% Y/Y), ham (-2.4%), milk (-1.0%), cheese (-2.1%), apples (-12.0%), poultry (+0.3%), and coffee (-1.6%). A lower level of transportation and shipping costs in the U.S. has been a factor in the moderating inflation for certain food groups. Consumer pushback on pricing and packaging sizes has also impacted demand for certain food items. Categories with prices still on the rise above the core inflation rate, included butter (+6.9%), olives/pickles/relishes (+4.2%), and baby formula (+5.6%).
Quantitative look: The food and beverage stocks with the highest Seeking Alpha Quant Ratings include Vita Coco (COCO), PepsiCo (PEP), Keurig Dr Pepper (KDP), Coca-Cola (NYSE:KO), BFR S.A. (BRFS), Tyson Foods (NYSE:TSN), Pilgrim’s Pride (PPC), Farmer Bros. Co. (FARM), Post Holdings (POST), Vital Farms (VITL), Whole Earth Brands (FREE), and Hershey Company (HSY).