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 0.9 percent in 2019 compared with 2018

As measured by Consumer Price Index data, average annual food-at-home prices in 2019 were 0.9 percent higher than in 2018. Most food categories posted modest increases of between 0.3 and 2.0 percent, contributing to generally low inflation at grocery stores in 2019. The price index for fresh vegetables increased the most—a 3.8-percent rise in 2019. Egg prices decreased the most, falling by 10.0 percent between 2018 and 2019, although eggs represent a small share of total grocery spending. Fresh fruits, fats and oils, and poultry had modest price decreases.

Food price inflation over 2015-19 lower than economy-wide inflation

From 2015 to 2019, the all-food CPI rose 4.5 percent—a smaller increase than the all-items CPI, which was 7.9 percent higher over the same time period. Food price increases were also below the 11.7-percent rise in housing costs and 11.6-percent increase in medical care costs. Retail pricing strategies, efficient food supply chains, slow wage growth, and relatively low oil prices have tempered food price inflation during this time period.

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

For a typical dollar spent in 2018 by U.S. consumers on domestically produced food, including both grocery store and eating out purchases, 37.4 cents went to pay for services provided by foodservice establishments, 14.9 cents to food processors, and 12.3 cents to food retailers. At 4.2 cents, energy costs per food dollar were below the 4.5-cent average for 1993-2018.

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 over 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. While the direction is often the same, the sizes of the price swings differ. Over the last two 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 2.3 percent.

U.S. food-away-from-home spending continued to outpace food-at-home spending in 2019

In 2019, food spending by U.S. consumers, businesses, and government entities totaled $1.77 trillion. Food away-from-home accounted for 54.8 percent of total food expenditures, up from 50.1 percent in 2009.

Americans’ budget share for total food was at a historical low of 9.5 percent in 2019

In 2019, Americans spent an average of 9.5 percent of their disposable personal incomes on food—divided between food at home (4.9 percent) and food away from home (4.6 percent). Between 1960 and 1998, the average share of disposable personal income spent on total food by Americans, on average, fell from 17.0 to 10.1 percent, driven by a declining share of income spent on food at home.

Food spending as a share of income declines as income rises

As their incomes rise, households spend more money on food, but it represents a smaller overall budget share. In 2019, households in the lowest income quintile spent an average of $4,400 on food (representing 36.0 percent of income), while households in the highest income quintile spent an average of $13,987 on food (representing 8.0 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.

Last updated: Wednesday, December 16, 2020

For more information, contact: Anikka Martin