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 2021, U.S. consumers, businesses, and government entities spent $2.12 trillion on food and beverages in grocery stores and other retailers and on away-from-home meals and snacks.
Average annual food-at-home prices were 11.4 percent higher in 2022 than in 2021. For context, the 20-year historical level of retail food price inflation is 2.0 percent per year. In 2022, prices for all food categories increased faster than their historical averages from 2002–21. Prices for 9 food categories increased by more than 10 percent in 2022. Egg prices rose most sharply, by 32.2 percent, primarily as a result of the highly pathogenic avian influenza outbreak. Prices for fats and oils increased by 18.5 percent, poultry increased by 14.6 percent, other meats increased by 14.2 percent, and cereals and bakery products increased by 13.0 percent. Beef and veal prices rose the slowest, at 5.3 percent, following large price increases in 2020 and 2021. The 2022 price increase for beef and veal was closest to its historical average of 4.4 percent.
From 2018 to 2022, the all-food Consumer Price Index (CPI) rose by a total of 20.4 percent—a higher increase than the all-items CPI, which grew 16.5 percent over the same time period. Food price increases were below the 26.4-percent increase in transportation costs but rose more quickly than housing, medical care, and all other major categories. From 2018–19, retail pricing strategies, efficient food supply chains, slow wage growth, and relatively low oil prices tempered food price inflation. However, 2020–21 were years of high food price inflation, due in part to shifting consumption patterns and supply chain disruptions resulting from the Coronavirus (COVID-19) pandemic. Food prices increased faster in 2022 than any year since 1979, due in part to a highly pathogenic avian influenza outbreak and the conflict in Ukraine which compounded other economy-wide inflationary pressures such as high energy costs.
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. In 2021, the production-weighted price of these crops increased by 50 percent while food prices increased by 4 percent. Price fluctuations of intermediate foods and feeds generally fall between swings in field crop and food 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 two decades, motor fuel prices experienced double-digit annual price swings, and the average annual change in food prices (2.8 percent) was lower than both household energy (3.7 percent) and motor fuel prices (7.2 percent). Food prices grew 9.9 percent in 2022, slower than the 17.7 percent price increase for household energy and the 32.1 percent price increase for motor fuel.