The Cost of Groceries: Are Food Prices Going Up?
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Updated May 10 to reflect the most recent consumer price index data.
Have food prices been rising? Absolutely. Thanks to a combination of inflation, pandemic-related supply-chain disruptions and tariffs on certain foreign imports, food prices have steadily risen since 2020 and are continuing to increase today.
Food prices rose 7.7% between April 2022 and April 2023, according to the most recent consumer price index (CPI) report from the Bureau of Labor Statistics. The CPI uses indexes to measure changes in average costs of items in a given period. There are specific indexes for these items, including food costs.
The BLS also found that:
The index for food at home (groceries) is 7.1% higher year-over-year, although from March to April, grocery costs actually decreased by 0.2%. That means grocery shoppers should be seeing lower prices, but restaurant patrons are still paying more for food than they did a year ago.
Specifically, full-service (sit-down restaurant) meals rose 7.2% year-over-year, while limited service meals (takeout only) rose 8.2% year-over-year.
Overall, the annual inflation rate has been declining.
Why are food prices rising?
Food prices are rising because of several factors, including inflation, labor costs, the supply chain and the war in Ukraine.
Labor costs are still high, according to the U.S. Bureau of Labor Statistics.
Food production costs are estimated to increase 4.1% in 2023, according to the U.S. Department of Agriculture.
Droughts and wildfires in the western U.S. led to lower-than-average crop yields from farms in that region, driving up consumer costs for food, according to NPR. Supply chain issues that have continued since the pandemic have affected food supply.
The war in Ukraine — a country nicknamed “the breadbasket of Europe” — has impacted the country’s ability to export food. Ukraine’s food exports have historically accounted for 9% of the global wheat market and 12% of the corn market, according to the USDA’s Foreign Agricultural Service.
Food prices are projected to rise in 2023, albeit at a slower pace than they did in 2022, according to the USDA.
Recent changes to food costs
The latest CPI data show the biggest price change from March to April in the baby food and formula index, which rose 4.3%. Other indexes with the most significant increases from March to April include: lettuce (+3.5%); fresh biscuits, rolls and muffins (+2.5%); ham (+2%); uncooked beef and veal (+1.8%); and carbonated drinks (+1.8%).
» MORE: Why are eggs so expensive?
The indexes that decreased most significantly from March to April include: oranges and tangerines (-3.8%); frankfurters (-2.9%); citrus fruits (-2.7%); bacon and related products (-2.2%) and fresh whole milk (-2.1%).
Annual increases (April 2022 to April 2023) have been most dramatic among the following indexes:
Frozen vegetables: +18.9%
Flour and prepared flour mixes: +17.8%
» MORE: How to save money on groceries
How are food prices tracked?
Food prices are tracked by several federal agencies, including the Bureau of Labor Statistics and the Bureau of Economic analysis.
The Bureau of Labor Statistics tracks the CPI, which measures the change in average price that consumers pay for goods and services, including food. So the CPI is also a measure of inflation.
In the CPI, the cost of food is of high relative importance to the overall index, compared to the other tracked goods and services. Food costs make up 13.78% of the index, to be exact. Its importance is second only to shelter (32.93%). But food prices, like energy, also tend to be more volatile, and for that reason it is usually left out of the “core inflation” version of the index.
The Bureau of Economic Analysis measures the personal consumption expenditures price index. The PCE tracks how much consumers spend on goods and services, as well as how consumers change spending habits in response to price shifts. Food is considered a non-durable good in its analysis. Core PCE — the Federal Reserve’s preferred measure of inflation — also excludes food and energy.
The U.S. Department of Agriculture measures the cost of different food plans. These plans are adjusted each month, based on CPI data and average family income levels: thrifty or low, moderate and liberal. The Thrifty Food Plan is the basis for the Supplemental Nutrition Assistance Program, or SNAP.