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.
For a typical dollar spent in 2019 by U.S. consumers on domestically produced food, including both grocery store and eating-out purchases, 38.5 cents went to services provided by food service establishments, such as restaurants and other eating places. Of the remaining food dollar, 14.7 cents went to food processors, and 12.1 cents to food retailers. At 2.3 cents, packaging costs per food dollar were the lowest ever reported by the current series, which provides statistics back to 1993. These data are prior to the COVID-19 pandemic.
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 million in 2019 to $876.8 million 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 million in 2019 to $813.4 million 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.
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.
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).