Even as inflation cools, it is still becoming more expensive to eat in the United States. Compared to January 2023, last month witnessed increases of 1.2% and 5.1% in grocery costs and restaurant prices, respectively.
Companies in the dining and food industry are coping with increasing labor costs and product prices (particularly for cocoa, beef, sugar, and french fries). Increases in the minimum wage across nearly two dozen states will only aggravate cost pressures.
As the chart below reflects, food consumption accounted for 11.3% of disposable income spending in 2022, the highest proportion in three decades. Unfortunately, this trend might be here to stay. Food inflation tends to be sticky, meaning that consumers must figure out how to work around lasting, higher prices rather than wait for them to decrease.
Consumers are changing their habits to cope. Skipping side dishes, coupon hunting, bargain bin shopping, meticulous spreadsheet planning, hunting, and gardening have all become popular with those looking to tighten their purse strings.
Source: Heather Haddon and Jesse Newman, WSJ; Heather Haddon and Jesse Newman, WSJ
Reade Ben is a policy analyst at the Manhattan Institute.
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