Retail food prices in the US are influenced by various factors, including farm commodity prices as well as processing and retailing costs. Over time, monthly fluctuations in grocery store prices tend to settle into modest annual increases. In 2023, Americans, including consumers and businesses, spent a staggering $2.6 trillion on food and beverages alone.
In 2024, food-at-home prices grew by 1.2% compared to 2023, showing a slowdown from previous years where increases were notably higher, reaching 5.0% in 2023. Egg prices soared by 8.5%, primarily due to the avian influenza outbreak, while beef and veal experienced a 5.4% increase. Comparatively, fish and dairy categories saw a decline in prices.
Looking back from 2020 to 2024, overall food prices in the US rose by 23.6%, surpassing the all-items CPI, which increased by 21.2%. The pandemic, alongside disruptions in supply chains and the Russia-Ukraine conflict, influenced these steep price hikes. However, there was a marked decrease in inflationary pressures in 2023 and 2024, leading to slower growth rates.
Retail and wholesale trade accounted for over a quarter of the US food dollar in 2023, with consumers dedicating 26.1 cents of each dollar to these sectors. Food services rose to 31.5 cents of the dollar while food processing decreased to its lowest share in decades. This reflects shifting dynamics in food spending.
Food prices in the US are less volatile than many farm prices, as evidenced by fluctuations in main crops like corn and wheat. While these crop prices can change significantly, the impact on retail food prices remains relatively muted. For instance, despite a 12.1% drop in crop prices in 2023, food prices still rose by 5.8%.
Comparing food and fuel prices, food tends to experience smaller annual price swings than motor fuel, which often sees double-digit changes. In 2024, food prices grew by just 2.3%, contrasting with motor fuel prices, which declined significantly. This ongoing trend of fluctuating costs reflects market responses to various economic factors.
In 2023, total food spending reached $2.6 trillion, fuelled by an increased expenditure on food-away-from-home, which rose to $1.5 trillion. This shift indicates changing consumer habits, with a greater proportion of the food budget now allocated to dining out rather than preparing meals at home.
For the average American, food expenditure accounted for 11.2% of disposable income in 2023, remaining stable from the prior year. However, there was a notable shift towards food-away-from-home spending, reflecting changing lifestyle preferences as consumers embraced dining experiences more than ever before.
Spending patterns on food reveal that as household incomes rise, the proportion of income allocated to food diminishes. For instance, the lowest income quintile spent a staggering 32.6% of their after-tax income on food, while those in higher income brackets allocated significantly less, showcasing the inverse relationship between income and food spending.
Globally, the relationship between calorie availability and household food spending diverges starkly. Lower-income nations typically allocate a larger share of their budget to food, while wealthier countries like the US see a smaller percentage dedicated to this necessity, even as calorie availability remains high, indicative of lifestyle differences across nations.
US food prices reflect a mix of farm costs and market dynamics. In 2024, food-at-home prices rose 1.2%, with a significant increase in egg costs due to avian flu. From 2020 to 2024, food prices increased by 23.6%, driven by pandemic disruptions. Spending reached $2.6 trillion in 2023, with a shift towards food-away-from-home. Income growth reduces food spending share among households.
In summary, US food prices are influenced by both agricultural commodity prices and additional market factors, leading to a complex pricing structure in retail environments. Recent trends show a slowdown in price increases with a notable rise in food-away-from-home spending, reflecting consumer behaviour shifts. The relationship between household income and food expenditure continues to highlight significant disparities in spending patterns, both domestically and globally.
Original Source: www.ers.usda.gov
