Food Prices and Spending
Retail food prices partially reflect farm-level commodity prices, but other costs of bringing food to the market (such as processing and retailing) have a greater role in determining prices on supermarket shelves and restaurant menus. Monthly price swings in grocery stores for individual food categories, as measured by the Consumer Price Index (CPI), tend to smooth out into modest yearly increases for food in general. In 2022, U.S. consumers, businesses, and government entities spent $2.39 trillion on food and beverages in grocery stores and at other retailers as well as on away-from-home meals and snacks.
Average annual food-at-home prices were 11.4 percent higher in 2022 than in 2021. For context, the 20-year historical level of retail food price inflation is 2.0 percent per year. In 2022, prices for all food categories increased faster than their historical averages from 2002–21. Prices for 9 food categories increased by more than 10 percent in 2022. Egg prices rose most sharply, by 32.2 percent, primarily as a result of the highly pathogenic avian influenza outbreak. Prices for fats and oils increased by 18.5 percent, poultry increased by 14.6 percent, other meats increased by 14.2 percent, and cereals and bakery products increased by 13.0 percent. Beef and veal prices rose the slowest, at 5.3 percent, following large price increases in 2020 and 2021. The 2022 price increase for beef and veal was closest to its historical average of 4.4 percent.
From 2018 to 2022, the all-food Consumer Price Index (CPI) rose by a total of 20.4 percent—a higher increase than the all-items CPI, which grew 16.5 percent over the same time period. Food price increases were below the 26.4-percent increase in transportation costs but rose more quickly than housing, medical care, and all other major categories. From 2018–19, retail pricing strategies, efficient food supply chains, slow wage growth, and relatively low oil prices tempered food price inflation. However, 2020–21 were years of high food price inflation, due in part to shifting consumption patterns and supply chain disruptions resulting from the Coronavirus (COVID-19) pandemic. Food prices increased faster in 2022 than any year since 1979, due in part to a highly pathogenic avian influenza outbreak and the conflict in Ukraine which compounded other economy-wide inflationary pressures such as high energy costs.
For a typical dollar spent in 2022 by U.S. consumers on domestically produced food, including both grocery store and eating-out purchases, 34.1 cents went to foodservice establishments such as restaurants and other eating-out places. For the remainder of the food dollar, retail trade (12.4 cents) decreased to its lowest share since 1995 and wholesale trade (10.7 cents) decreased to its lowest share since 2011. Food processing (14.4 cents) also decreased to its lowest share since at least 1993, the first year recorded in the series.
Corn, wheat, and soybeans are the top three U.S. field crops and comprise the majority of field crop inputs to the U.S. food supply. The average farm price of these crops, weighted by total production, regularly rises or falls by more than 10 percent from one year to the next. However, these price swings have relatively small impacts on food prices. In 2022, the production-weighted price of these crops increased by 83 percent, while food prices increased by 10 percent. Intermediate foods and feeds price fluctuations generally range between swings in field crop and food prices.
Food prices typically move in the same direction as fuel prices, often with a slight lag, as it takes time before fuel costs are incorporated into food prices. Although the direction is often the same, the sizes of the price swings differ. Over the past two decades, motor fuel prices experienced double-digit annual price swings, and the average annual change in food prices (2.8 percent) was lower than both household energy (3.7 percent) and motor fuel prices (7.2 percent). Food prices grew 9.9 percent in 2022, slower than the 17.7 percent price increase for household energy and the 32.1 percent price increase for motor fuel.
In 2022, food spending by U.S. consumers, businesses, and government entities totaled $2.39 trillion, after a sharp decline in 2020 in which the food market was disrupted by the Coronavirus (COVID-19) pandemic and the recession. U.S. food spending in 2020 totaled $1.81 trillion. Food-at-home spending increased from $954.7 billion in 2021 to $1.05 trillion in 2022 and food-away-from-home spending increased from $1.16 trillion in 2021 to $1.34 trillion in 2022. Food-away-from-home spending accounted for 56 percent of total food expenditures in 2022.
U.S. consumers spent an average of 11.3 percent of their disposable personal income on food in 2022— reaching levels similar to the 1980s. The share of disposable personal income spent on food in 2022 was divided nearly equally between food at home (5.62 percent) and food away from home (5.64 percent). The share of disposable personal income spent on total food has trended downward—driven by a decline in share of income spent on food at home. In 2020, during the Coronavirus (COVID-19) pandemic, the share of disposable income spent on total food presented the sharpest annual decline (8.2 percent) since 1967. In 2022, the share of disposable personal income spent on total food had the sharpest annual increase (12.7 percent)—driven by an increase in the share of income spent on food away from home.
As their incomes rise, U.S. households spend more money on food but it represents a smaller share of their income. In 2022, households in the lowest income quintile spent an average of $5,090 on food (representing 31.2 percent of income), while households in the highest income quintile spent an average of $15,713 on food (representing 8.0 percent of income).
High-income countries such as the United States and the United Kingdom have higher food spending in absolute terms, but the share of household consumption expenditures devoted to at-home food is low—less than 10 percent. In Kenya and other low-income countries, at-home food’s share of consumption expenditures can exceed 50 percent. Per capita calorie availability follows the reverse pattern. According to the most recent available data, U.S. per capita calorie availability was among the highest at 3,864 calories per person per day, while Kenya’s was estimated at 2,201 calories per person per day.