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 2018, U.S. consumers, businesses, and government entities spent $1.71 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 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.
In 2018, Americans spent an average of 9.7 percent of their disposable personal incomes on food—divided between food at home (5.0 percent) and food away from home (4.7 percent). Between 1960 and 1998, the average share of disposable personal income spent on total food by Americans, on average, fell from 16.8 to 10.1 percent, driven by a declining share of income spent on food at home.
As their incomes rise, households spend more money on food but it represents a smaller overall budget share. In 2018, households in the lowest income quintile spent an average of $4,109 on food, representing 35.1 percent of income, while households in the highest income quintile spent an average of $13,348 on food, representing 8.2 percent of income.