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 2017, U.S. consumers, businesses, and government entities spent $1.62 trillion on food and beverages in grocery stores and other retailers and on away-from-home meals and snacks.
For a typical dollar spent in 2017 by U.S. consumers on domestically produced food, including both grocery store and eating out purchases, 36.7 cents went to pay for services provided by foodservice establishments, 15.0 cents to food processors, and 12.6 cents to food retailers. At 3.8 cents, energy costs per food dollar were below the 4.5-cent average for 1993-2017.
Food away-from-home's share of total food expenditures exceeded at-home food spending for the first time in 2010. During the 2007-09 recession, food away from home’s share of total food spending stayed at or just below 50 percent before surpassing its pre-recession share by rising to 50.2 percent in 2010 and continuing to grow to its 2017 share of 53.8 percent.
In 2016, Americans spent an average of 9.9 percent of their disposable personal incomes on food—divided between food at home (5.2 percent) and food away from home (4.7 percent). Between 1960 and 1997, the average share of disposable personal income spent on total food by Americans, on average, fell from 17.0 to 10.5 percent, driven by a declining share of income spent on food at home. The share of income spent on total food began to flatten in the late 1990s, as inflation-adjusted incomes for many Americans have stagnated or fallen.
Households spend more money on food when incomes rise, but food represents a smaller portion of income as they allocate additional funds to other goods. In 2017, households in the middle income quintile spent an average of $7,061 on food, representing 14.3 percent of income, while the lowest income households spent $4,070 on food, representing 34.1 percent of income.