It’s undeniable that households across America are feeling the pinch at the checkout counter. Over the last five years, the price of food, encompassing both grocery stores and restaurants, has surged dramatically. With no signs of significant relief on the horizon and potential further price increases looming, it’s crucial to understand the underlying factors driving these escalating costs.
Since January 2019, food prices in the United States have experienced a striking increase of nearly 30 percent. This sharp rise has left many families struggling to maintain their grocery budgets. The topic of expensive groceries has been a persistent conversation in homes and news outlets since the onset of the COVID-19 pandemic lockdowns. However, even four years later, the high cost of food remains a prominent news story and a daily concern for many. While looking back at historical data, like Delish’s infographic highlighting the cost of groceries in different years, can be a nostalgic exercise, real-time tools such as CBS’s Price Tracker vividly illustrate the stark reality of price increases across the board since 2019—from everyday items like grapes to essential utilities like electricity and housing. This leaves us with a pressing question: what exactly is causing grocery prices to skyrocket?
Understanding the Consumer Price Index (CPI)
The explanation for expensive groceries is multifaceted, but a key starting point is the Consumer Price Index (CPI). The CPI serves as a vital economic indicator, measuring the average change over time in the prices consumers pay for a representative basket of goods and services. In essence, it quantifies inflation as experienced by consumers in their everyday living expenses. As visualized in the data from the Federal Reserve Bank of St. Louis, the CPI for food (US average, in cities) has shown a significant upward trend since the mid-1970s. This increase became particularly pronounced during and after the COVID-19 pandemic, indicating a rapid acceleration in food price inflation.
Digging into the Factors Influencing Grocery Prices
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While the rising costs of food, both in grocery stores and restaurants, are a result of numerous and constantly evolving factors, examining some key issues individually can shed light on why our grocery bills in 2024 are considerably higher than they were in 2019.
COVID-19 Disruptions
The COVID-19 pandemic is a primary factor in the increased cost of groceries compared to pre-pandemic times. Safety measures like lockdowns and widespread staff shortages due to illness caused significant disruptions to supply chains globally. Import prices saw dramatic increases, sometimes as high as 1,000 percent for food goods arriving at US West Coast ports from countries like China. Furthermore, competition within the grocery industry was skewed by larger retailers, who leveraged their size to secure larger allocations of goods in short supply from suppliers. Essentially, the pandemic resulted in less food reaching grocery stores, increased costs to transport goods, and many stores struggling to maintain adequate stock amidst increased consumer demand. These factors collectively led to higher prices at the cash register.
Transportation Costs and Fuel Prices
Fuel costs play a crucial role in determining food prices in the United States. The relationship is so intertwined that, as highlighted by the USDA, consumer purchasing of fresh fruits and vegetables decreases when high fuel costs translate to more expensive produce. In 2019, the average price for a gallon of regular gasoline was approximately $2.60, while diesel cost around $3.06 per gallon that year. Fast forward to 2024, and the national average for a gallon of regular unleaded gasoline was $3.07 and diesel is approximately $3.55 per gallon. These increased fuel costs directly impact the prices retailers set for groceries and other goods, as transportation is a significant part of the food supply chain.
Animal Diseases, Weather Events, and Crop Failures
Diseases, weather events, and crop failures can have a surprisingly significant impact on food prices. Egg prices, for instance, have experienced considerable volatility over the past two years, largely due to outbreaks of avian flu. When bird flu (H5N1) first hit the US in 2022, egg prices were around $2 per dozen. They then reached a peak of $4.82 per dozen in January 2023. In December 2024, following the infection of over 123 million poultry in the US, prices have decreased to approximately $2.50 per dozen nationally. Prices for specialty eggs like cage-free, organic, or local varieties will likely be higher, especially in areas with a higher cost of living.
Wheat, a staple ingredient in numerous foods from bread and pasta to snacks and cereals, has also faced shortages. This is partly due to the Russia-Ukraine war (discussed further below), and also due to drought-related shortages in domestic wheat production in 2022 and 2023. Researchers have described the 37 percent loss from that growing season as “Dust Bowl-like”, attributing spring and fall rain shortages to delayed crop growth, reduced yields, and increased crop abandonment. Climate change is exerting sweeping and far-reaching effects on the production of all food crops, ranging from grains like wheat and corn, to vegetables and fruits, and even livestock and poultry.
While drought conditions can severely limit the food supply, excessive rainfall is equally problematic. Climate change is contributing to larger, more intense storms that are not only more frequent but also move more slowly, and projections suggest these trends will continue. Crops grown in coastal regions, including beef and dairy cattle, poultry, citrus fruits, tomatoes, peppers, grapes, lettuce, almonds, strawberries, carrots, sugar, and even 33 percent of the world’s pecan production (primarily in Georgia), are especially vulnerable to these larger, more powerful storms that linger longer and release excessive amounts of water over agricultural lands and livestock. Crops that survive the initial impact are then more susceptible to disease. Each storm-induced shortage leads to price increases for the affected foods. Researchers estimate that crop losses from Hurricanes Milton and Helene could reach a staggering $5 billion in total.
Global Conflict and Trade Restrictions
Global food security was significantly impacted by Russia’s invasion of Ukraine, a nation that exports substantial quantities of wheat, corn, agricultural fertilizer, and oilseeds like sunflower and canola. Russia’s military actions were aimed at disrupting or halting Ukraine’s exports by targeting the country’s agricultural centers, shipping ports, and land transport routes to neighboring countries. While international agreements and humanitarian efforts have alleviated some of these restrictions, Russia’s withdrawal from the Black Sea Grain Initiative, which provided safe passage for Ukrainian grain exports through the Black Sea, could trigger another surge in grain prices in the months ahead.
Inflation
The economic recovery following the COVID-19 pandemic led to inflation in many countries, including the United States. Although inflation is reportedly easing from its 2022 peak, even smaller monthly price increases accumulate rapidly. While recent months have shown lower monthly CPI increases for overall food costs (just 0.4 percent in November 2024), the total cumulative inflation rate over the past five years is a significant 23.4 percent. Based on national averages and disregarding other factors like crop failures or import tariffs, a grocery cart that cost $100 in 2019 would now cost approximately $123.40.
Fair Pay for Food Laborers
It’s important to recognize that very few food items are purchased in their completely raw, unprocessed state. Even fresh produce like avocados, bananas, and cucumbers undergo a series of processes: picking, washing, sorting, labeling, wrapping, packing into cartons, loading onto trucks, shipping by land or sea to distribution centers, transporting to grocery stores and supermarkets, unpacking, inventorying, displaying for sale, and finally, scanning at the register by store employees.
For minimally processed foods like dried beans and milk, additional steps such as drying, pasteurization, packaging, and refrigeration add further labor to the journey from farm to consumer.
For processed foods like bread, the process expands to include milling, mixing, baking, and the essential tasks of equipment cleaning and maintenance. Ultra-processed foods involve an even more complex chain, encompassing the production of each individual ingredient.
The food supply chain relies on the labor of millions of individuals every day, at every stage of the process. Each of these workers deserves fair and livable wages. Often, increases in labor costs are reflected in consumer prices. Since 2019, the food supply chain has experienced severe labor shortages, particularly during the initial two years of the pandemic. This has effectively driven up food costs in tandem with rising labor costs.
Mergers, Consolidations, and Corporate Practices
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The increasing trend of mergers and acquisitions in the grocery industry is likely to further complicate access to healthy and affordable foods. Higher food prices, fewer grocery store options, and reduced retailer competition are detrimental to American consumers – exactly the concerns raised regarding the proposed mega-merger between supermarket giants Kroger and Albertsons. Fortunately, this particular merger was recently blocked in federal court through a preliminary injunction in favor of the Federal Trade Commission. However, a pattern of smaller acquisitions and regional grocery store mergers has persisted since 2018, contributing to higher prices due to decreased competition among retailers.
An FTC investigation into major retailers, including Kroger, Walmart, and Amazon, revealed that these companies exploited rising costs as an opportunity to engage in price gouging during the COVID-19 pandemic, further inflating prices and boosting their profits. During the Kroger-Albertsons merger trial, a Kroger executive even testified that Kroger increased prices for milk and eggs “significantly higher” than justified by inflation alone. Concerns about exploitative pricing have also surfaced in Massachusetts, where a study indicated that Stop & Shop charged higher prices in a lower-income neighborhood compared to a wealthier, suburban area nearby. Alarmingly, grocery chains that raised prices during pandemic-related food shortages and supply issues have often failed to reduce prices even after these pressures eased. This means consumers continue to pay more while retailer profit margins have expanded, and the CEOs of the nation’s largest grocery retailers earned as much as $26 million in 2023.
A Perfect Storm for Food Insecurity
Already historically high food prices are preventing many Americans from accessing sufficient and nutritious food. When combined with a 19.2 percent increase in the price of all goods since 2019, a significant rise in housing costs reaching 47 percent in some regions, and a real median income that has only increased by 17.3 percent over the same period, American families are facing considerable financial strain.
The impact is, unsurprisingly, unequally distributed. Households in the lowest income bracket spend approximately 33 percent of their income on food, while households in the highest income bracket spend around 8 percent. The number of American households experiencing food insecurity—lacking consistent access to adequate food and uncertain about their next meals—has risen from 10.5 percent in 2019 to 13.5 percent in 2024. This translates to roughly 4.8 million additional households, or about 10.2 million more American adults and children struggling with food insecurity.
How CSPI is Fighting Food Insecurity
CSPI is actively working to combat food insecurity through various initiatives. Our efforts on the Healthy, Hunger-Free Kids Act, the National School Breakfast and Lunch Programs, SNAP, WIC, and Summer EBT programs are crucial in ensuring America’s children are fed, particularly when food costs are high. With the 2024 Farm Bill still under consideration, you can contribute by urging Congress to support child nutrition programs in the upcoming federal budget and by encouraging your state representatives to support access to healthy foods.
In 2023, a concerning number of 76 American counties lacked a full-service grocery store. This scarcity exacerbates food insecurity and increases both grocery and transportation expenses for residents who must travel to neighboring counties for food shopping. This is why we have called on Dollar General, which operates 35,000 stores across the United States, to feed families better and expand their food offerings to include healthier options. Currently, Dollar General provides fresh produce in over 5,000 stores.
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