Katrina Wittkamp
The Consumer Price Index report for March indicated a 3.8% year-over-year increase in the core rate, compared with the +3.7% expected by economists and the +3.8% pace seen in February.
The closely-watched food category was up 2.2% year-over-year, with food away from home up 4.2% during the month and food at home up just 1.2%. The pace of inflation for food at home has now been below the Federal Reserve's overall target rate of 2% for six 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 breakfast cereal (-1.7% Y/Y), rice (-1.3%), eggs (-6.8%), milk (-1.6%), apples (-10.1%), and coffee (-2.2%). 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 baby formula (+9.9%), beef and veal (+7.6%), sugar (+5.6%), and candy/chewing gum (+4.4%).
Packaged food stocks with strong stock year-to-date returns so far include Lifeway Foods (LWAY) +59%, Whole Earth Brands (FREE) +41%, BRC Inc. (BRCC) +33%, Pilgrim's Pride (PPC) +28%, Lancaster Colony (LANC) +22%, SunOpta (STKL) +21%, Post Holdings (POST) +16%, and Hormel (HRL) +10%, Conagra Brands (CAG) +9%, and General Mills (GIS) +8%.
Food sector laggards on a YTD basis include Hain Celestial (HAIN) -38%%, Lamb Weston (LW) -26%, Simply Good Foods Company (SMPL) -17%, J&J Snack Foods (JJSF) -17%, and Beyond Meat (BYND) -16%.
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