Grocery Purchasing Power – How has it changed in the U.S?
As of September 2022, the price of groceries rose by 11.2% year over year. This spike in food costs means your purchasing power is lower, so you’ll either need to spend more money on groceries or cut back on what you buy.
If you’re feeling like grocery prices have inched up seemingly overnight, you’re not alone. The last time grocery costs spiked this much was in 1980, when the U.S. was coming off more than a decade of rising prices in the wake of higher government borrowing and spending spurred by World War II and the Vietnam War. Today, few seem to agree on what’s behind rapid inflationary growth. Some business leaders, politicians, and economists link increasing wages, while others say pandemic stimulus checks issued to consumers and businesses play a big part. Then there’s Russia’s war with Ukraine, major supply chain disruptions, and record corporate profits. Time will tell which may be the driving factor. For now, nearly everyone can agree that the result is the same: Rising costs are hitting Americans’ wallets. An estimated 93% of U.S. adults surveyed said the prices of goods in their metro area increased over the past two months, according to the Census Bureau’s October 5 Household Pulse Survey. The same survey found that 83% of adults said they’re somewhat or very concerned about additional price increases over the next six months—an understandable reaction for anyone who has walked past a grocery store shelf recently. “Food at home,” the term used by statistical agencies to describe grocery items purchased to eat at home, rose in price by 11.2% year over year in September 2022, according to the Bureau of Labor Statistics (BLS). The BLS gathers information about the prices of goods by sending researchers to visit retail stores in major metro areas and reporting the prices of commonly purchased items, including eggs, coffee, and meats.
Americans spent more than 14% of their pretax income on food in the 1960s, but since the turn of the millennium, that spending has hovered around 10%. That typically splits into about 5% going toward eating out and 5% for groceries consumed at home, according to the U.S. Department of Agriculture. A consumer earning the median weekly income who spends 5% of their income on groceries to eat home would have only had to spend 3% on the same basket of groceries in 2002 dollars. Americans spent far more of their earnings on food decades ago, but that percentage has declined as U.S. agriculture has become more productive by introducing new technologies.