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 2021 by U.S. consumers on domestically produced food, including both grocery store and eating-out purchases, 33.6 cents went to foodservice establishments such as restaurants and other eating-out places. This amount resumes the foodservices share’s upward trend after it declined in 2020, due to changes in food-away-from-home spending early in the Coronavirus (COVID-19) pandemic. For the remainder of the food dollar, retail trade (12.7 cents) decreased to its lowest share since 1995 and wholesale trade (10.7 cents) decreased to its lowest share since 2011.
In 2021, food spending by U.S. consumers, businesses, and government entities totaled $2.12 trillion, recovering from a sharp decline in 2020 in which the food market was disrupted by the Coronavirus (COVID-19) pandemic and the recession in which food spending totaled $1.81 trillion. Food-at-home spending increased from $888.2 billion in 2020 to $955.6 billion in 2021 and food-away-from-home spending increased from $922.2 billion in 2020 to $1.17 trillion in 2021. Food-away-from-home spending accounted for 55 percent of total food expenditures in 2021, returning to pre-COVID-19 pandemic share levels.
In 2021, U.S. consumers spent an average of 10.3 percent of their disposable personal income on food—divided between food at home (5.2 percent) and food away from home (5.1 percent). The share of disposable personal income spent on total food has trended downward since 1961—driven by a decline in share of income spent on food at home. The Coronavirus (COVID-19) pandemic resulted in the sharpest annual decline in the share of disposable income spent on total food since 1967. 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. In 2021, the share of disposable personal income spent on total food returned to 2019 levels at 10.3 percent. Note that the shares in this chart do not include spending by businesses and government entities.
U.S. households with higher incomes spend more money on food, but the amount spent represents a smaller overall portion of their budgets. In 2021, households in the lowest income quintile spent an average of $4,875 on food (representing 30.6 percent of income), while households in the highest income quintile spent an average of $13,973 on food (representing 7.6 percent of income).