Inflation is low. Prices are still high. What gives?

The declining rate of inflation should feel good. Yet every grocery aisle presents a new math problem.

Is this bag of chips worth $5? Do we really pay $6 for a pack of bacon now? And when did frozen orange juice reach almost $4 a can?

“While we hear in the news inflation is stabilizing, the reality for the consumer is it’s not,” said Keith Albright, marketing insights and analytics manager at Cargill. “When they go down the aisle they’re still burdened with that value equation.”

Inflation is backing off generational highs, but that doesn’t mean life is any cheaper. Higher prices still fuel the racing mind of our economic anxiety.

“It’s all about making trade-offs. When the consumer is walking down the aisle they are constantly having that self-debate: If I can save here I can get the Starbucks coffee I want,” Albright said. “That’s not new behavior, but it’s more important now.”

The Consumer Price Index (CPI) measures the average change in prices urban consumers paid over time for a “market basket” of goods and services, from milk and shoes to haircuts and day care. The CPI has cooled from a 9.1% high in June 2022 to 2.9% in July, meaning prices are still rising, but at a slower rate.

It’s helpful to think about prices in the context of wages and other factors, said Louis Johnston, an economics professor at the College of St. Benedict and St. John’s University.

“People say, ‘Well, I paid a nickel when I was a kid for this.’ What is that nickel relative to? Was it relative to earning a dollar a week? Was it relative to earning $1,000 a week?” he said. “Prices that are just expressed in dollars or cents are close to meaningless.”

Grocery prices are at least expected to remain fairly stable over the next year. The U.S. Department of Agriculture predicts overall grocery prices will increase 1% this year and less than 1% in 2025.

But it’s all cumulative. Starting in 2020, it took grocery prices just a few years to rise as much as they had over the previous 16 years.

As General Mills CEO Jeff Harmening said of prices late last year: “Whether that’s food or gas or rent or any number of things ... it’ll take a little while for consumers to settle into what new price points are.”

When Vice President Kamala Harris, the Democratic nominee for president, talks about reining in “price gouging” at the grocery store, she’s looking at the 25% growth in the cost of food at home since 2020. Slower inflation in recent months has not erased the overall upward arc of prices.

Food companies say they raised prices to keep up with the rapidly increasing costs to make, ship and market their products while maintaining profit margins. Permanently higher wages might mean permanently higher food prices.

A Federal Trade Commission Report found major grocery chains “used this moment [of the pandemic] to come out ahead at the expense of their competitors and the communities they serve.” But many smaller grocers have narrow profit margins and are hurt by higher prices they pass along as consumers spend less or shop elsewhere. Cub parent UNFI has seen retail earnings drop 94% this year.

The share of Americans’ disposable income going to food has hit a 30-year high — 11% — but that’s largely due to restaurant spending, according to USDA data. While grocery spending as a share of disposable income has been declining overall for decades, diners are paying more every year for a drive-thru burger or a booth with the family. Restaurant prices are up 28% since 2020, driven by higher wages and other overhead costs.

Just looking at the most recent inflation report, we should be seeing deals on ham and rice. In July, the price of ham dropped 2% compared to the year before, and rice fell almost 4%. Yet both remain near record-high prices. Frozen orange juice, which has seen a major price spike due in part to diseased orange trees, should see a noticeable decline in price over the next year since a better harvest is predicted in 2024.

Housing prices are buoying the CPI, in part because high interest rates — intended to slow consumer spending and bring inflation down — have sidelined buyers and stalled new construction. The Federal Reserve is expected to make a rate cut in September, a move Minneapolis Fed President Neel Kashkari has said the weakening labor market likely justifies.

Natural gas prices have dropped after a warm winter left a lot of supply unused. Electricity, meanwhile, is getting more expensive, largely because of major investments in aging infrastructure and renewable energy.

Gasoline prices are volatile, fluctuating based on factors from time of year to geopolitical tensions. Though the per-gallon cost of unleaded, regular gas spiked coming out of the COVID-19 pandemic and is still higher than in 2019, prices this summer have landed about where they were a decade ago.

After plummeting in 2020, car insurance costs have spiked due to rising repair costs, more frequent and serious crashes, severe weather and an uptick in consumer litigation. Storm damage could cause rates to jump more than 50% in Minnesota this year, according to insurance comparison website Insurify.

Health insurance inflation has fallen year-over-year, though the CPI measures earnings retained by health insurers, so it’s not a direct comparison with consumer prices such as health plan premiums. Survey data suggests premiums have been rising due in part to higher care costs, such as a spike in weight-loss drug use. There’s also a lag between when inflation experienced by health care providers is passed on to consumers through premium increases.