7 Surprising Facts about Food Prices

Cash-back credit cards can help earn money back when you spend at the grocery store.

Many people believe that Americans waste a bunch of money eating out — that avocado toast and lattes are budget wreckers, for example — and that’s sort of true. In 2014, an important line was crossed — for the first time since the government tracked this sort of thing, families spent more eating out than eating at home.  But when you really look into the numbers about the way Americans spend money on food, a far more complex picture emerges.  Like many other typical household purchases — such as refrigerators or clothes — many food items are actually much cheaper than they were a generation ago. And overall, food isn’t nearly the budget-busting line item it used to be.  In fact, according to government statistics, U.S. families are spending much LESS overall on food than they did a generation or two ago. Food now eats up about half as much of the family budget than it once did.

Even that fact is a good news/bad news story, however, according to Annemarie Kuhns, a food economist at the U.S. Department of Agriculture.  Part of the reason food consumers less of household spending is because housing costs and health care consumes so much more.

“It really depends on the food you are purchasing,” Kuhns said. “Processed food is less expensive, but fresh fruits and vegetables are much more expensive.”

To get a better picture of what’s really going on with your budget, here are 9 surprising facts about food spending. As you read them, remember, it’s always easy to find an anecdote or two that confirms a belief you might have — most of us have a friend who complains about not being able to afford a home, but does indeed indulge in avocado toast regularly. That’s just an anecdote, however, a narrow view of things.  To really understand the issue, you have to look at the broader picture.  Most of the data below comes from the Consumer Price Index maintained by the U.S. Bureau of Labor Statistics, which follows food prices by pricing a representative market basket of goods periodically.

1.) Yes, food is generally getting more expensive

First off, you aren’t crazy. Your grocery bill keeps getting bigger — and the cost of food is rising faster than most things. From 2012-2016, food prices rose 6.1%, but the overall consumer price index rose only 4.5%.  NOTE:  That’s bad, but it’s less than the 9.5 percent rise in housing costs and 11.7 percent increase in medical care costs.   This is a long-term trend, too. The USDA says grocery store prices are up 4.5% faster than economy-wide prices during the past 30 years.

2.) Food is cheaper this year, though (Eggs are a HUGE bargain)

Last year, for the first time in nearly 50 years, so-called “food-at-home” prices dropped. The USDA says retail food fell 1.3 percent. Some items fell far more. The price of eggs, for example, dropped almost 20 percent in a year, thanks to lingering impacts of the avian flu. That’s good news for you, but bad news for grocery stores, and we’ve seen plenty of them punished on Wall Street as a result. Kroger, the nation’s largest supermarket chain, said in March that its same-store sales had fallen 0.7% during the end of 2016.

3.) Yes, we are eating out a lot more

Economists call eating out “food away from home” — as opposed to food-at-home — and it’s true that Americans are spending more while eating out than ever.  This has something to do with the state of the economy: During the 2007-2009 recession, food away from home share fell, for example.

Don’t be so quick to judge this consumer behavior, however. It’s true that many Americans don’t take the time to cook any more, but rising restaurant prices are partly to blame, also. Higher food-away-from-home prices mean more overall spending, whether or not people spend more nights at restaurants. And there’s some indication American’s love affair with certain kinds of restaurants has ended.  Back in 2014 — the same year Americans eating at home fell into second place in the BLS data – NPD Group said the average American dined at a restaurant 74 times annually, the lowest reading in more than 30 years.

Continued trouble at fast-casual chains seems to confirm that finding. Restaurant analyst TDn2K says that overall, restaurant same-store sales have now fallen for five straight quarters, and traffic fell more than 3% in the first quarter of this year, compared to the prior year.

4.) No, food isn’t the budget killer you might think

Overall, food consumes a lot less of a family’s earnings than it did back in the 1960s, or even the 1980s. Between 1960 and 2007, the share of disposable personal income spent on total food by Americans, on average, fell from 17.5 to 9.6 percent, driven by a declining share of income spent on food at home.

This seems hard to believe, but it’s true, says Kuhns.

“You have to think of it in terms of relative vs nominal terms,” she said.  “It’s one of those things were prices go up each year, but so does income.”

The share of income spent on total food began to flatten in 2000, however — partly because food prices began to rise, and partly because incomes have stagnated.

In the end, if you are still convinced that Americans eating out too much is the cause of many personal finance problems, consider this: The Agriculture Department says that in 2014, Americans spent 4.3 percent of their disposable personal incomes on food away from home. That’s not a budget buster.

5.) Food is a budget killer for the poor, however

The richer you are, the less you care about the price of food, for obvious reasons — but more critically, the less your monthly budget is subject to shocks from rising food prices.

In 2015, middle-income households spent 12.4 percent of their income on food, while families in the lowest one-fifth of income spent fully one-third of their money on food. That’s a stunning gap, and makes poorer families very sensitive to sudden increases in the price of essentials like milk or bread.

6.) We sound a bit like whiners

One might conclude that those who complain about rising food prices in the past decade or so have forgotten history. Even in a bad, recent year (2008), food rose about 6%. Back in the 1970s, double-digit increases were typical.  In 1973, food prices rose 16.4%, and then in 1974, another 14.9 percent. Those increases were blamed on food commodity and energy price shocks, and the larger economy saw shocking inflation, too.

7.) Historically, eggs are now the best bargain — Butter is cheaper, too

It can be hard to compare the price of items across the decades, but there are ways. For example, a look at a 1971 Sears catalog shows a basic refrigerator cost $399, or about $2,450 in today’s dollars. That would buy you a heck of a refrigerator today.

Another useful method is to compare the increase in costs over time, which the BLS does.  A fascinating chart compares the cost of items back in 1913 vs 2013.  Butter was once the most expensive item in a consumer’s grocery sack. Now, coffee, steak, and many other items are more expensive.  The price of potatoes has climbed 39-fold since 1913, but the price of eggs is up only 5-fold during the same span. Bread costs 25 times more; sugar costs 12 times more; coffee 20 times more, but rice only 8 times more.

If you’re looking for a more recent comparison, NPR crunched other BLS data comparing 1982 and 2012 (all in 2012 dollar) and found that most meats are much cheaper than they used to be (steak is down 30%!); but some vegetables are more expensive (peppers up 34%!).

How much do Americans spend on food anyway?

That’s not an easy question to answer, as circumstances vary so widely, but the USDA tries. A family of four with two children under 5 spent between $571 and $1,116 on food-at-home each month during 2015, the agency says. That same family with older kids spends between $657 and $1,305, proving it’s best to keep your kids from growing up.

On the other hand, a single male between 19-50 spends between $172 and $346 monthly.  That doesn’t include eating out, of course.

Don’t be so hard on food.

Finally, Kuhns stresses that inflation data on food is a very tricky calculation and government statistics can’t capture all the factors that really make up “price.”  When calculating inflation for items like computers, economists factor in that buyers get more for their money today than they did in the past — today’s PCs are far more powerful.  Those adjustments aren’t made for food, she noted, even though today’s supermarket shoppers get a lot more than they used to.

“When you go into a grocery store aisle, it’s nothing like 1985,” she said. “We have bagged lettuce. Imported vegetables.  We have access to a lot more fruits and vegetables,” she said. “In the 80s, most stuff was local and you could only get what was in season. Now you can get whatever you want any time of the year.”

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10 Healthy Grocery Store Hacks


If you’re like most Americans, one of the biggest line items on your monthly budget is food. We all need to eat, right? One of the biggest and most common misconceptions is that eating healthy means spending a fortune at the grocery store. With the right strategy, you can save money and improve your diet. These healthy grocery store hacks will help.

1. Stick to the Perimeter of the Store

Have you ever realized that healthy items are kept on the outer perimeter of the store and that junk food is in the aisles? A really easy hack for spending less on food is to stick to the perimeter and avoid getting sucked into the aisle abyss where prepared foods live. By doing this, you’ll only buy whole foods that are fresh and healthy. There is one exception: the frozen section. It can be good to have some frozen vegetables or seafood on hand.

2. Shop at Ethnic and Discount Stores

Many times, shopping at ethnic stores is much less expensive than big name grocers or specialty stores. As a bonus, they have a wide variety of items that are likely healthier than what you’d encounter at a typical American supermarket. If you don’t have one nearby, search for a discount supermarket like Aldi. You won’t find name brand items there, but think of it as an experiment in saving money.

3. Prepare a Meal Plan

Meal planning can be used for healthy shopping, too! It can be even more beneficial, as you want to make sure you’re filling up on the right kinds of food. You’ll want a decent amount of protein, vegetable, meat or both, depending on your dietary preferences, in your cart so you don’t get hungry in between meals. Some people have more success eating six small meals per day — shop accordingly.

4. Use Coupons

Typically, there aren’t many coupons for healthy food in the paper, but there are other places you can look. Whole Foods has an entire online sales flyer, complete with coupons. They may be stuck on a board at the front of the store as well. Other stores have point-of-purchase coupons you should watch for, and it doesn’t hurt to look for coupons or discounts on packages, either. If food is close to expiring, the store may have a discount coupon sticker on it. If you can gobble it up quickly or create a meal later that day with it, take advantage of your good fortune.

5. Compare Prices

It always pays to compare items and prices between stores. I used to shop at Whole Foods, but there was a Trader Joe’s in the shopping center right across the street. It afforded me the perfect opportunity to compare prices between the two if they carried the same type of item. The “healthy” aisle in your local grocery store may be a great option, too.

6. Buy Store Brand

Many stores have been quick to create their own “healthy” brand when it comes to organic foods, and like any store brand item, they’re usually cheaper than the competition. You can give these a try before you buy the high-end brands. You might be surprised at the quality.

7. Buy Whole, Not Pre-Packaged

It’s easy to fall for the “convenience” trap, but it’s always going to be the most expensive option. You’re better off buying kale, romaine or iceberg lettuce than the salad bag kit. You should try to stay away from the ready-to-go salad that costs almost as much as a salad in a restaurant.

Another good example is buying pre-cut fruit and vegetables. It might save you a little time, but how hard is it to chop everything up? Do it all at once and then put it in a container so it’s ready to go for your next meal or snack.

8. Buy in Bulk

Warehouse clubs can save you a lot of money if you know your prices. Buying items like beans, oats, nuts or meat in bulk can be worth it if you have the storage.

9. Buy in Season

You might love strawberries, but the price isn’t as loveable when they’re not in season. It goes without saying, but it’s often not worth buying produce when it isn’t in season. Besides the cost, it won’t be as fresh, as it likely traveled very far to get to your store. You can try a local farmer’s markets for alternatives.

10. Don’t Always Buy Organic

It’s tempting to think you should always buy organic because our minds automatically equate that word to “healthy,” but there are times when it can be unnecessary. For fruits and vegetables with thick skin, such as mangoes, eggplant, sweet potatoes and avocados, you can often get away with non-organic. Fruits and vegetables contaminated with pesticides include apples, spinach, celery, cucumbers and grapes. For a full list, you can check with the Environmental Working Group.

It’s not hard to shop for healthy food and spend less as long as you’re strategic about it. Hopefully these 10 hacks will help you save more and eat better.

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