Soaring grocery bills and restaurant tabs are eating up more of Americans’ paychecks than they have in three decades, according to the federal government.
In 2022, US consumers spent 11.3% of their disposable income on food as raging inflation jacked up prices on everything from bacon, eggs and milk at local supermarkets to burgers and burritos at fast-food joints, according to data from the Agriculture Department.
That’s the most since 1991, when President George H. W. Bush was ramping up the first Gulf War, Nirvana’s “Nevermind” was topping the charts — and food purchases accounted for 11.4% of shoppers’ disposable income, the USDA said.
The problem is showing no signs of letting up as restaurants, retailers and manufacturers alike continue to grapple with soaring labor costs and the price of key commodities including beef and cocoa continues to ratchet higher.
According to the USDA, food-at-home prices increased another 5% last year compared to 2022 — or double the historical average rate at which retail food price inflation rose per year between 2003 and 2022.
Recently, those increases have slowed — up 1.2% in January compared with a year ago.
Still, that’s leaving shoppers with punishing tabs for everything from meat to produce to spaghetti sauce.
Meanwhile, “away from home” food prices at restaurants surged a staggering 5.1% over the same time period, according to the Consumer Price Index.
In 2022 and 2023 it was boom times for restaurants, which gives them latitude to raise prices,” Moody’s chief economist Mark Zandi told The Post.
Fast-food prices shot up even more — 5.8%, according to the government data — a trend that’s set to continue after 22 states raised their minimum wage last month.
Earlier this month, Chipotle said it will be forced to further raise prices as California after a $20-an-hour minimum wage law takes effect there in April.
The menu hikes are already taking a toll, with McDonald’s admitting this month that customers making less than $45,000 per year are eating at home more frequently as grocery prices come down.
I think what youre going to see as you head into 2024 is probably more attention to what I would describe as affordability, McDonalds chief executive Chris Kempczinski said on an earnings call with analysts earlier this month.
But Zandi is skeptical whether restaurants will lower their prices.
Businesses really dont want to cut prices, Zandi said. They will do it if demand is falling and they have no options, but the more palatable strategy is to hold the line until affordability is reestablished.
Meanwhile, corporate profit margins economy-wide have been rising, Zandi said.
Food prices were thrust into the spotlight on Super Bowl Sunday when President Joe Biden posted a video to social media in which he called out snack companies for “shrinkflation.”
“Some companies are trying to pull a fast one by shrinking the products little by little and hoping you won’t notice,” Biden said in a video posted on X, formerly known as Twitter, ahead of Super Bowl LVIII.
“Give me a break. The American public is tired of being played for suckers,” he said.
Biden, who offered no solutions or policies to address the practice, did not name any specific companies but several brands were shown in the video, including Gatorade, Doritos, Breyers and Tostitos.
We appreciate that the President has to deflect attention away from inflation that has lingered during his administration, said David Chavern, president and CEO of the Consumer Brands Association, in a statement.
Chavern added that the group would like to work with Biden on real solutions that benefit consumers.
Last year, the prices for fats and oils rose by 9% while the cost of sugar and sweets jumped 8.7%. The rate of price increases for cereals and bakery products stood at 8.4% last year.
The only food item that saw its price decline last year was pork, which was 1.2% cheaper compared to 2022, according to USDA data.
Meat prices grew but at a slower pace than their 20-year historical averages. Beef and veal prices rose 3.6% while eggs were 1.4% more expensive last year compared to 2022, the USDA said.
The cost of fresh fruits rose 0.7% while fish and seafood prices ticked up 0.3%.
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