Food Prices and Spending

Retail food prices partially reflect farm-level commodity prices, but packaging, processing, transportation, and other marketing costs, along with competitive factors, 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 2019, U.S. consumers, businesses, and government entities spent $1.77 trillion on food and beverages in grocery stores and other retailers and on away-from-home meals and snacks.

Grocery store food prices up 3.5 percent in 2021 compared with 2020

Average annual food-at-home prices were 3.5 percent higher in 2021 than in 2020. For context, the 20-year historical level of retail food price inflation is 2.0 percent per year—meaning the 2021 increase was 75 percent above average. Meat and fish prices rose most sharply; beef and veal prices increased 9.3 percent, pork prices increased 8.6 percent, fish and seafood prices increased 5.4 percent, and poultry prices increased 5.1 percent in 2021. Fresh fruit prices also increased by 5.5 percent in 2021. Dairy products and fresh vegetables were the only included categories with price increases lower than their historical average.

Food price inflation over 2017–2021 slower than only housing and transportation

From 2017 to 2021, the all-food CPI rose 11.1 percent, which is higher than the all-items CPI. Food price increases were below the 11.7-percent rise in housing costs and the 14.4-percent increase in transportation costs. Retail pricing strategies, efficient food supply chains, slow wage growth, and relatively low oil prices tempered food price inflation from 2017–2019. However, 2020 and 2021 were years of high food price inflation due to shifts in consumption patterns and supply chain disruptions resulting from the coronavirus pandemic and associated mitigation efforts.

Over a quarter of the U.S. food dollar is spent on eating-out services

For a typical dollar spent in 2020 by U.S. consumers on domestically produced food, including both grocery store and eating-out purchases, 27.9 cents went to foodservice establishments such as restaurants and other eating-out places. The foodservice share of the food dollar decreased after 9 years of gains as households shifted to food-at-home consumption during the first year of the COVID-19 pandemic. For the remainder of the food dollar, transportation (4.1 cents) and wholesale trade (11.9 cents) rose to their highest shares reported in the series, which provides statistics back to 1993.

Retail food prices are less volatile than farm prices

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 year to year. However, these price swings have relatively small impacts on food prices. For example, in 2011, the production-weighted price of these crops increased by 43 percent, but food prices rose 4 percent. Price fluctuations of intermediate foods and feeds generally fall between swings in field crop and food prices.

Food prices less volatile than fuel 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 2 decades, motor fuel and household energy prices have experienced double-digit, annual price swings, while food prices have posted annual increases of between 0 and 6 percent, for an average, annual increase of 2.4 percent.

U.S. food-at-home spending surpasses food-away-from-home spending in 2020

Errata: On August 20, 2021, text was revised to correct unit errors for expenditures. Expenditure values were corrected from millions of dollars to billions of dollars. The chart was not affected.

In 2020, food spending by U.S. consumers, businesses, and government entities totaled $1.69 trillion, down from 1.79 trillion in 2019, partly due to the COVID-19 Recession that disrupted typical food consumption. Food-at-home spending (food purchased from supermarkets, convenience stores, warehouse club stores, supercenters, and other retailers) increased from $808.0 billion in 2019 to $876.8 billion in 2020, while food-away-from-home spending (food purchased from restaurants, fast-food places, schools, and other away-from-home eating places) decreased from $978.2 billion in 2019 to $813.4 billion in 2020. This resulted in food-at-home spending accounting for 51.9 percent of total food expenditures, the first year it has accounted for more than half of food spending since 2008, during the Great Recession.

Budget share for total food dropped by 10 percent in 2020, a new historical low

In 2020, U.S. consumers spent an average of 8.6 percent of their disposable personal income on food—divided between food at home (5.0 percent) and food away from home (3.6 percent). The share of disposable personal income spent on total food has trended downward since 1960, which has been driven by a shrinking share of income spent on food at home. However, the COVID-19 pandemic resulted in the sharpest annual decline in the share of disposable income spent on total food since USDA began tracking these expenditures. In 2020, the share of disposable income spent on total food decreased by 10.1 percent (from 9.6 percent in 2019). In part, this decline was the result of the largest annual increase in disposable personal income since 2000 and the sharpest decrease in food-away-from-home spending.

Food spending as a share of income declines as income rises

U.S. households with higher incomes spend more money on food, but the amount spent represents a smaller overall portion of their budgets. In 2020, households in the lowest income quintile spent an average of $4,099 on food (representing 27 percent of income), while households in the highest income quintile spent an average of $12,245 on food (representing 7 percent of income).

Calorie availability and importance of food in household spending are inversely related

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 3,682 calories per day, while Kenya’s was estimated at only 2,206 calories.