Food prices rose by 11% between August 2021 and August 2022 — a rate of increase not seen in decades, according to a new report from the federal government.

And the trend in food prices is expected to continue upward in 2023.

Typically, food prices increased about 2% on average each year from 2013 to 2022 — the years of focus in the U.S. Government Accountability Office’s just-released report, “Food Prices: Information on Trends, Factors and Federal Roles.

But officials in the U.S. Department of Agriculture predict that food prices will continue to increase by roughly 8% in 2023.

“We’re seeing food prices at an all-time high, which is obviously very important to people,” Steve D. Morris, a GAO director involved with the report, told the Deseret News. “What we tried to do is lay out what the trends look like over time and hit some of the factors and what the government can do or can’t do to keep food prices down.”

Morris said the price increases are pinching everyone at least a little and “pose a hardship for many consumers” — especially those with limited resources. The federal government says low-income households spend nearly a third of what they earn on food, compared to the 10% the average household spends.

“What that translates to is families making some pretty tough choices,” said Morris, adding some are probably forced to choose between buying food and paying other expenses.

Gary Roy, an assistant director at the Greater Boston Food Bank, agrees. “Here in Eastern Massachusetts, our food pantry partners continue to see more and more people as the cost of living continues to rise swiftly, increasing food, housing and utility costs, while wages are not keeping up.”

Driving up prices

The report says the price that households pay for food is impacted by lots of things, from the cost and availability of animal feed and fertilizers to transportation costs and, of course, the weather, which can slow transport, but also ruin crops. Drought and wildfires both change the food supply and the price tag attached to it.

The pandemic’s supply chain and labor issues drove up food prices, and officials say the Russia-Ukraine war played a role as well.

“It’s a global economy and it’s a global food supply chain, so when you have disruptions, whether it’s the pandemic, whether it’s the Ukraine crisis, these things impact close to home,” Morris said. “COVID pointed out it’s a fairly vulnerable system and impact can be felt within days. We saw that at the grocery store when certain items became scarce pretty quickly.”

COVID-19 slowed meat processing as plants closed down when workers got sick.

If you’re curious how the Russia-Ukraine conflict made your cereal more expensive, the GAO report said that it “affected the global supply of agricultural commodities.” The two countries are “significant producers and exporters of several commodities, including wheat, corn, sunflower oil and fertilizer. The conflict caused reductions in global wheat supplies that, coupled with already-reduced wheat supplies in the U.S. due to drought, led to increases in U.S. wheat prices, according to USDA officials.”

Other factors like disease — think about bird flu and the need to euthanize millions of chickens — also play a role, as do worker wages and labor shortages, energy costs and the policies used to regulate food and agriculture.

Other factors that can make it more expensive to eat include packaging and material shortages. And consumer demand plays a major role in whether the cost of specific items goes up or down.

Food prices actually dropped in 2016 and 2017, but recent increases more than made up for that.

The Bureau of Labor Statistics and the USDA, quoted in the report, said the prices consumers pay for food also vary depending on where someone lives, what kind of food they purchase and whether they buy food at a grocery store or at a restaurant.

The price of restaurant food rose 8% on average, compared to the 11% increase for food purchased retail, per the report. But meals at restaurants are, as a general rule, more expensive than cooking at home.

The increases were not uniform, but depended on the types of food one bought, as well:

  • Cereals and bakery products rose 13%.
  • Fruits and vegetables cost 9% more.
  • Meat, poultry and fish increased by 10%.

Geography matters. In Miami and Ft. Lauderdale, food prices climbed about 5%, compared to a 14% boost in Detroit. The report said that food costs from 2021 to 2022 increased 12% in Seattle, about 10% in New York City and Boston, nearly 12% in San Francisco and 14% near Dallas-Fort Worth. Denver saw just over an 11% increase, while the cost of food in Honolulu was about 9.5% higher than the previous year.

Overlapping challenges

Pinning blame for price increases precisely is nearly impossible, the GAO found. The report notes that:

  • Different factors that boost costs can occur at the same time.
  • Food production may involve many steps before the food reaches the table, so there’s a lot of room for the interplay of challenges. “When more factors are involved, it is more difficult to identify the extent to which any one factor affects the retail price of a given product,” the report says.

The report notes that certain steps along the way may increase the cost while others could lower it, so sometimes it balances out with little in the way of an overall price change.

  • Pricing strategies may mask price increases. An obvious one is reducing the amount of a product in a package while holding a per-unit price steady, but there are invisible, proprietary strategies, too. The report’s example is what happened to the price of lettuce after flooding in 2017. Less lettuce was available and the price paid to producers went up, but the average retail price actually dropped a little, according to the USDA.

“It is unclear why the retail price decreased because retailers’ pricing strategies and other key industry data are often proprietary — thus, not available to the public or federal agencies such as USDA, according to experts,” the GAO report said.

Related
The perfect storm? Reducing benefits for food, inflation still raging and a food bank surge
Will the volunteers come back?

The USDA, the FDA, the Department of Justice, the Federal Trade Commission, the Department of Labor, the Environmental Protection Agency, the Department of Commerce and the Department of Transportation all help get food to the dinner table. 

The report notes that the federal government can support the food supply chain through policies like diverting food from restaurants to retailers, as happened in the pandemic, or by offering technical assistance and guidance to food producers or making sure that rules support food safety and market competition, among other strategies. But it does not set prices on products. 

Help for consumers

“The continued increase in food prices will hit low-income families hard, and make it more difficult for them to buy groceries,” Gina Cornia, executive director of Utahns Against Hunger, told the Deseret News.

She said that federal nutrition programs “can help eligible families fill the budget gap created by increasing food prices.” She noted recently that most families who receive food assistance are working families, are elderly or have disabilities that prevent them from working.

Jocelyn Lantrip, director of marketing and communications for the Food Bank of Northern Nevada in Sparks, said she expected older Americans to be among those hardest hit by the combination of rising food prices and less access to food assistance.

Cornia said she’s worried that lawmakers are not supporting programs like the Supplemental Nutrition Assistance Program. “Current proposals in the House would make it harder for people to qualify; we should be making it easier.”

Several food bank operators told the Deseret News earlier this month that high inflation has made it harder for families to buy food for their own families, much less donate to help those the food banks serve. So donations are down at a time when need has gone up.

Consumers can help themselves

The price of food is not completely out of consumers’ control. Money Management International offers some tips for reducing the bite that food takes from your wallet:

  • Eat out less often. But do eat out for its other benefits. Meals out cost more than meals in, so that’s a reliable way to stretch your food budget.
  • Don’t waste food. The organization says a third of U.S. food is tossed — $161.6 billion worth annually.
  • Shop your cupboards and fridge. When you plan meals, shop or consider dining out, think about food you have already at home.
  • Make bigger meals and freeze some of it for later. Then use it.
  • Pay attention to the unit price on store shelves when shopping. Convenience can be costly: An apple is cheaper whole than pre-sliced.