Food costs on the rise in the Midwest, even as US inflation levels continue to dip

Midwesterners have likely noticed that their grocery bills continued to rise in May as food costs in the U.S. region have climbed higher and higher in the past 12 months, even as national inflation levels fall.

Overall, consumer costs increased in May by 0.3% in the Midwest, with food costs rising by 0.7%., according to the Labor Department’s consumer price index. Despite the bump in grocery prices, residents of the Midwest region — which is comprised of 12 states, including Ohio, Illinois and Michigan — may have noticed some relief at the gas pump, as gasoline costs dipped by 2% between April and May.

Released Tuesday, the federal government's consumer price index serves as an inflation gauge prepared monthly by the Bureau of Labor Statistics. The index measures the average change over time of what urban consumers pay for daily goods and services such as food, clothing, shelter, fuel, transportation fares and charges for doctors' and dentists' services.

Now that inflation has fallen to 4% nationally, down from 8.6% a year prior, forecasters have indicated that the Federal Reserve is expected to abstain from another rate hike Wednesday following a historic 14-month wave of interest rate increases.

In the past 12 months, consumer costs have increased by 3.7% in the Midwest, which also includes Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wisconsin.

Food prices alone have spiked by 6.8% since last May, though energy costs have fallen by 13%, largely the result of declining prices for gasoline.

Key regional takeaways

• Prices paid for fruits and vegetables saw the largest increase, rising 2.5% from April to May. However, meats, poultry, fish and eggs declined in price by 0.8%. 
• Energy costs fell by 1.2% over the month, mainly due to lower prices for gasoline (2.0% price decline). Prices for electricity, however, increased by 0.3% in the month of May. 
• Since last May, energy prices have fallen by 13%, again largely due to lower prices for gasoline, which has dipped by a whopping 18.3%. But prices paid for electricity rose in the last year by 6.4%. 
• The cost for used vehicles has also risen by 3.1% in the last month, despite falling by 3.6% in the last year.

Inflation around the USAs US inflation continues to cool, consumer costs largely on the rise in West

Inflation around the USAs inflation continues to cool across the US, Northeast may continue to feel pinch

U.S. inflation numbers for May

May marked the 11th straight month that inflation slowed across the United States, providing Americans with relief at both the gas pumps and grocery stores.

Consumer prices increased 4% last month from last May, the smallest yearly increase since March 2021, but still higher than the Federal Reserve’s 2-3% inflation target. That increase is also down from 4.9% in April and a 40-year high of 9.1% last June, according to the Labor Department’s consumer price index.

Prices rose 0.1% from April to May following a 0.4% increase from March to April.

The index for shelter was the largest contributor to the monthly increase, followed by an increase in the index for used cars and trucks, according to the report.

The food index increased 0.2% in May — including a 0.1% increase to grocery prices — after being unchanged in the previous two months. Restaurant prices increased by 0.5% and are up 8.3% over the past year.

Meanwhile, the energy index declined 3.6% as energy commodities like gasoline and oil, as well as energy services such as electricity and utilities, all fell. Gas prices alone fell 5.6% in May, down nearly 20% from a year ago.

Other indexes that saw a decrease in May include household furnishings and operations, as well as airline fares.

Nationally, price increases have largely eased, which is part of the reason the Federal Reserve is expected to pause its series of aggressive interest rate hikes meant to staunch the fallout of inflation. However, the Fed's concern with core prices — which exclude volatile food and energy items and better capture longer-term trends — may mean another interest hike is in the horizon in July.

The Fed will announce its official interest rate decision Wednesday afternoon after the ending of its next policy meeting. That announcement will also include a summary of economic projections of what it expects inflation, employment, interest rates, and economic growth to be in coming years.