Rising food prices are changing the way we eat and shop
Skyrocketing food prices in the U.S. are changing the way Americans eat and grocery shop — they're buying more store brands, and less costly meat and produce. Some are now just making do with less.
- Meanwhile, food manufacturers continue to "shrinkflate" — putting less potato chips or cereal in the bags and boxes that we buy.
Why it matters: This is inflation hitting home, contributing to the overall bummed-out mood of the nation.
- Once upon a time, grocery shopping mainly fell to women, but these days 92% of adults do it. That means most everyone's noticed rising food prices — and many have adjusted in ways both minor and potentially devastating.
Driving the news: The cost of "food at home" is up 11.9% from last year, the largest increase since April 1979, according to the scorching hot inflation numbers released Friday. Nearly every category of food the government tracks saw accelerating price growth. The most inflationary categories, as highlighted in a note from JPMorgan on Friday:
- Egg prices up 32% year over year, thanks in part to a January bird flu outbreak that killed about 6% of commercial egg-laying chickens, as Axios' Hope King explained last month.
- Fats and oils were next on the list at 16.9%, partly due to the war in Ukraine, followed by poultry (16.6%) and milk (15.9%).
Unusual trend: The increases in prices for food at home are outpacing food-away-from-home, which is up *only* 7.4%.
- This is "historically unusual," JP Morgan notes. The growth differential is the widest since 1974, they said.
State of play: For a good snapshot of how rising food prices are changing behavior, we checked the most recent Beige Book — where the 12 regional Federal Reserve banks report on economic conditions in their area (h/t Planet Money's Indicator podcast on this one):
- "Customers have recently taken aggressive steps to save," write the authors of the Cleveland Fed's entry.
- Shoppers are buying half gallons of milk instead of full gallons. They're also switching to cheaper store brands to save money on food, they said.
- More troubling, the Chicago Fed said a regional food bank "reported a considerable increase in demand."
Go deeper: About half of shoppers who've noticed the rising prices are looking for more deals, according to a May survey from FMI, the food industry trade group; 35% are switching to store brands and 21% are buying less fresh meat and seafood.
- Food is a big expense, especially for those on the lower end of the income spectrum. Nearly 16% of spending by the lowest income Americans goes to food, according to the Bureau of Labor Statistics.
Business aren't just raising sticker prices — they're also shrinkflating.
- Boxes of Post Honey Bunches of Oats now contain 17% less cereal, according Consumer World, a website run by a former Massachusetts assistant attorney general who tracks shrinkflation. The cereal box is now 12 ounces, from 14.5 before, the site notes.
- Also smaller: Chobani Flips yogurt and Folgers coffee, NPR reports.
The bottom line: Consumers have a lot of flexibility to adapt to rising food prices, in contrast to gas, where the choice is more binary — you can drive less, but you don't have any real product choices.
- So we're adapting. Household weekly spending for groceries is $148, according to FMI. That's up 4% from last year, a far lower number than that scary CPI one.