Food Prices Rise at Slower Pace, Raising Concerns for Consumers

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Food prices have seen a slower growth rate in June, but economists remain worried that prices may reach a tipping point where consumers will be forced to make significant changes in their spending habits.

According to the latest data from the Bureau of Labor Statistics, food prices increased by 3% compared to the previous year. Though consumers have been experiencing consistent price hikes, the rate of increase has slowed down.

Specifically, grocery prices saw a 5.7% jump in June compared to a year ago, while dining out became 7.7% more expensive. These figures are notably lower than the peak inflation rate for grocery prices (13.5% in August) and dining out (8.8%).

Jayson Lusk, the head and distinguished professor of Agricultural Economics at Purdue University, highlighted the ongoing pressure on food prices. He mentioned that there is a concern about whether this pressure will reach a point where consumers struggle to afford the foods they desire.

The Consumer Food Insights Report from Purdue University indicated that reported food insecurity across households of different income levels reached 17% in June, the highest level since March 2022. Although this increase isn’t too far from the usual range (14% two months ago), it is alarming considering the financial vulnerability of many consumers.

It is worth noting that the pandemic-era expansion of the Supplemental Nutrition Assistance Program (SNAP) ended in March. As a result, SNAP recipients are now receiving an average of $90 less per month, according to the Center on Budget and Policy Priorities, a progressive policy think tank based in Washington, D.C.

The Impact of Policy Changes on Food Insecurity

The recent increase in food insecurity may partially be attributed to households adapting to new policy changes, according to experts. On average, consumers are currently spending approximately $120 per week on groceries and $70 per week on dining out or takeouts.

The Purdue University conducted a study which revealed that middle-income households earning between $50,000 and $100,000 per year as well as low-income households earning less than $50,000 per year have reduced their weekly expenditure on groceries and dining out by around $10. In June, low-income households spent an average of $103 per week on groceries while middle-income households spent $118. On the other hand, households with incomes surpassing $100,000 spent approximately $141 per week on grocery shopping.

An alarming statistic from a recent Morning Consult report suggests that nearly 47% of low-income households (earning less than $50,000 annually) relied on SNAP benefits in May, compared to approximately 40% in February.

Low-income households not only face food insecurity but are also grappling with additional financial burdens such as utility bills and rent expenses. Consequently, there has been a surge in eviction rates in recent months. Propel, an app striving to enhance the financial well-being of low-income Americans, conducted surveys among SNAP users to ascertain their concerns regarding food insecurity, financial stability, and housing situations.

The impact of this crisis is evident in the words of Anna, a user from South Carolina, who shared her distressing experience with the Propel survey: “We were unable to pay bills because we had to buy food. We’re about to lose our home.”

Furthermore, Propel’s June survey reports that there was an 11% increase in the number of households surveyed that paid their utilities late from May to June. Shockingly, only 27% of respondents managed to pay their utility bills on time and in full.

These findings highlight the dire consequences of rising food insecurity among low-income households, emphasizing the urgent need for effective solutions to alleviate this crisis.

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