Rising prices for groceries and restaurant meals are eating into more Americans’ paychecks than at any time in 30 years, the federal government says.
U.S. consumers will lose their disposable income in 2022 as rampant inflation drives up the prices of everything from bacon, eggs and milk at local supermarkets to burgers and burritos at fast-food restaurants, according to USDA data. 11.3% of the total was spent on food.
This is the highest amount since 1991, when President George H.W. It accounted for 11.4% of shoppers’ disposable income, the USDA said.
The problem shows no signs of slowing down as restaurants, retailers and manufacturers alike continue to grapple with rising labor costs and the prices of key commodities including beef and cocoa continue to rise.
According to the USDA, dine-in prices rose an additional 5% last year compared to 2022. This is twice his historical average increase in annual inflation in retail food prices from 2003 to 2022.
These increases have slowed recently, with a 1.2% increase in January compared to the same month last year.
Still, shoppers will face steep taxes on everything from meat to produce to spaghetti sauce.
Meanwhile, prices for “out-of-home” food at restaurants rose by a staggering 5.1% over the same period, according to the Consumer Price Index.
“2022 and 2023 were good for restaurants, so there was room for price increases,” Mark Zandi, Moody’s chief economist, told the paper.
Fast food prices have soared even further (by 5.8%, according to government data), a trend that is likely to continue after 22 states raised their minimum wages last month.
Chipotle said earlier this month that it would be forced to raise prices further after California’s $20-an-hour minimum wage law went into effect in April.
Menu price hikes have already taken a toll, with McDonald’s this month acknowledging that customers making less than $45,000 a year are increasingly eating at home as food prices fall.
“As we move into 2024, the focus is probably going to be on what I would call affordability,” McDonald’s CEO Chris Kempczinski said on an earnings call with analysts earlier this month. ” he said.
But Zandi is skeptical that restaurants will lower their prices.
“Companies don’t really want to lower prices,” Zandi said. “They will do that if demand decreases and they have no choice, but the better strategy is to hold the line until affordability returns.”
Meanwhile, corporate profit margins are rising “across the economy,” Zandi said.
Food prices were in the spotlight during Sunday’s Super Bowl after President Joe Biden posted a video on social media accusing snack companies of “shrinkflation.”
In a video posted to X (formerly Twitter) ahead of Super Bowl IV, Biden said, “Some companies are trying to act quickly by shrinking their products little by little and hoping they don’t get noticed.” ” he said.
“Give us a break. The American people are tired of being played for,” he said.
Biden offered no solutions or policies to address the practice and did not name specific companies, but the video showed several brands, including Gatorade, Doritos, Bryers, and Tostitos.
“We appreciate the President’s need to divert attention from the inflation that has persisted during his administration,” Consumer Brands Association President and CEO David Chavern said in a statement.
Chavan added that the group wants to work with Biden on “real solutions that benefit consumers.”
Last year, oil and fat prices rose by 9%, while sugar and confectionery prices rose by 8.7%. The price increase for cereals and bakery products last year was 8.4%.
The only food item whose prices fell last year was pork, which was 1.2% cheaper than in 2022, according to USDA data.
Meat prices rose, but at a slower pace than the average for the past 20 years. Beef and veal prices rose 3.6% last year compared to 2022, and eggs were 1.4% higher, according to the USDA.
Fresh fruit prices rose 0.7% and seafood prices rose 0.3%.
with post wire
