Food costs have grown faster than the rate of inflation for years, and now that trend has accelerated. The cost of food at home has jumped a whopping 31% last month¹ in comparison to the July of last year, to reach its highest level since September 2008, as prices climbed for everything from ground beef to orange juice, government data show.
What is food inflation?
Food inflation describes the rising cost of food, measured by the rate at which prices for foodstuffs have changed over time. Food costs are one of many factors to consider when tracking consumer price inflation.
What do you need to know about soaring food prices?
Some economists also believe food costs may be an even better measure than overall consumer price changes because they’re more likely to be affected by supply issues that can quickly drive up prices.
When food prices spike sharply, consumers buy less or substitute lower-priced products. As a result, food inflation tends to predict future movements in the broader U.S. consumer price index (CPI).
How quickly rising food prices can affect your personal financial situation depends on how much of your budget is devoted to buying groceries. But here are a few numbers that will give you an idea: Statistic Brain reports that 36% of Americans spend over $150 per week on groceries, and 27% spend between $75 and $100.
The Center for the Study of Services at The Travelers Institute calculated that the typical American household spends about 10 percent of its income on food alone. When you look at it that way, any increase in food prices—no matter how small—translates to real money out of consumers’ pockets.
For example, if you’re like most Americans and spend 10 percent of your income on food each year, even a 1 percent increase in food prices means that you have to spend an extra $35 each month on groceries.
If you’re making $20 per hour (or $41,600 a year) and spending a conservative ten percent of your income on food (roughly $346 per month), a 10-percent increase in food costs translates into an extra $400 annually—enough to make most people consider cutting back or taking it out of savings.
If your salary is closer to the national median ($30,500), that increase results in an extra $305. In either case—no matter how much you make—that’s still a significant hit to the wallet.
How long can consumers withstand high prices before they cut back?
Most of us would be willing to make adjustments if food prices stayed high for a month or two, but longer than that, and even the most frugal shoppers may have to spend more on groceries.
And as food prices rise, consumers will almost certainly seek savings elsewhere: Eating out less often is one obvious answer, but many people also shop more at discount grocers and try to buy cheaper products by switching from name-brand foods (which cost more) to private label products (which cost less). This may not always save money, but we’ll explore some ways to save in a minute.
What’s behind this trend? Inflation of all kinds had been steadily creeping up over the past few years—the food CPI rose 1.8 percent in 2019 and 3.9 percent in 2020²—but food prices have risen much faster than other goods and services, especially this year.
Although the drought that hit large parts of the United States last summer has contributed to the problem (because it affected farmers’ ability to grow crops), a June report from The Wall Street Journal³ suggested pandemic driven plant shutdowns and a recent ransomware cyberattack on JBS is an even bigger factor.
Several factors are making beef more expensive, including the rising cost of corn as cattle feed due to drought and pandemic-related shortages, higher demand for meat in countries like China, a European export ban on hormone-treated beef.
In addition, new animal disease outbreaks such as Porcine Epidemic Diarrhea Virus (PEDv) have limited U.S. pork production since early 2013, further driving up costs.
As if all of that weren’t enough, the pandemic created a demand for products, with a significant labor shortage that includes a lack of truckers, factory workers, and tremendous waste as crops died or were destroyed due to the inability to process them in a timely manner.
The price of food has always been a political issue, with government officials supposedly working to keep costs low for the benefit of consumers. But as we’ve seen in recent years—especially since food prices started climbing again in 2014—keeping food affordable is not an easy task.
In fact, former President Obama cited high meat and poultry prices when he signed into law a bill that sets new standards on country-of-origin labeling (COOL) for meats. Unfortunately, this repealed law makes it more difficult for the consumer to make educated choices about the food products they purchase and consume.
The U.S.-EU Transatlantic Trade and Investment Partnership may also affect our access to specific products, especially those imported from other countries where safety regulations and inspections differ from ours. And more recently, some states have talked about raising minimum wages. These are all issues that will likely impact food prices in the coming years.
The Bottom Line: Rising food prices affect everyone, especially people living on tight budgets. There’s no telling how long they might continue rising and how much more consumers must pay for their groceries—but we can hope this trend is short-lived. In the meantime, it helps to know some strategies for saving money on groceries.
16 Easy Strategies for Saving Money on Groceries
As prices for the most popular foods rise, many consumers are looking for ways to reduce their grocery costs. Here are a few ways you can save on groceries:
1 Compare Prices and Buy in Bulk
Because food prices have increased so much over the past year or two, comparing different stores’ pricing policies and buying food in bulk when it’s cheaper makes sense.
This is especially true now that some of the big-box stores—such as Walmart and Target—have opened membership-only warehouse clubs with reduced cost per unit prices on many products (see link above).
In addition, if you like to shop at farmer’s markets or produce stands (where there are also price differences between vendors), you can ask the farmers or owners what their best prices are and stock up when they offer a sale.
2 Learn About Unit Pricing
Learn about unit pricing, so you know which items—such as cereal, pasta, flour, sugar, and tea—to buy in bulk (where it’s cheaper) or by the packaged size (where it’s more convenient).
You’ll also find this information for many meat products at your local grocery store. Even if the per-pound price is higher than for some other meats, you may be able to save money by purchasing larger cuts of meat that cook well but usually cost less per pound than smaller cuts intended for grilling or broiling.
3 Learn to Use Leftovers
You can save money on many foods—especially meat and produce—by using leftovers creatively in another meal. One way is to freeze the leftover food for later use; freezing also helps preserve some of the nutrients in fresh produce such as broccoli, spinach, bell peppers, cauliflower, and onions that lose some of their nutritional value after a few days.
I recently shared an article with you on how to freeze berries (to be used later in smoothies). There is also a helpful forum here with a focus on creative ways to use leftover ingredients.
Cooking dinner? Don’t throw out those seeds! Make them into crackers instead, then add a nice cheese dip. Don’t waste the veggie scraps either; they can be transformed into tasty vegetable stock or as an addition to soups and stews.
4 Eat Less Meat and Chicken, or Use Scraps
Reduce the amount of meat and poultry you eat to save money on your grocery bill, especially since prices for these items rise quickly when they’re scarce or their demand is high.
You can cut down on the cost by eating a few meatless meals each week (with foods such as beans and tofu) and limiting your portions to smaller quantities than you’d typically consume.
Also, look for recipes that contain less expensive cuts of meat, such as ground turkey breast instead of regular turkey breast or sirloin in place of tenderloin—these are just a few substitution ideas.
Many of us aren’t getting enough protein in our diets. If you are, try eating less meat or switch to more economical cuts. You can also make your own meat from scraps that might otherwise be thrown away; for example, when you cook a pot roast, save the bones and turn them into soup stock or “bone broth”.
Here’s a good recipe that shows how to use leftover bones to make a nutritious broth. While beef and pork are the most common red meat sources, other affordable alternatives include:
- Organ meats—not only is liver nutritious, but it’s also in season right now and pretty cheap too!You can use it instead of ground beef in hamburgers (or make pate out of it) or mix with onions and potatoes for a meal that tastes like steak but costs less than $4 to prepare.
Be sure to buy organic liver from an ethical farm to avoid toxins such as antibiotics; here’s some information on finding healthy organ meats.
- Wild game —freeze-dried or otherwise packaged stuff is pricey, but if you hunt your own food this year, you can save a lot of money.If you have a freezer, make yourself some “survival food” by sorting through the carcasses and bones that remain after butchering your deer or other wild game (not just the good parts) and using them to make a rich stock.
This will make it easier to fit frozen foods into your budget come wintertime when you’re snowed in and don’t feel like leaving home to buy groceries.
- Fish– not just for Fridays anymore! In comparison to ground beef or chicken breast, fish is an excellent protein source that doesn’t contain saturated fat and cholesterol.
In addition, many types of fish are rich in omega-3 fatty acids (which have been shown to help lower blood pressure and reduce heart disease risk) and vitamins A and D (both critical for healthy skin).
The least expensive types of fish are usually canned and not extremely pretty to look at (such as sardines, mackerel, or salmon), but if you can get past these drawbacks, you’ll find that they’re a great value for your dollar.
Canned tuna is also one of the most inexpensive fish options; try mixing it with some brown rice and beans.
- Pork—the current recession has led to increased prices for all meats, but pork remains an affordable option for those who like bacon and sausage as well as chops and roasts.
Buy in bulk (from farms or co-ops whenever possible) and freeze; that way, you’ll have food you can count on when money’s tight. Here are more tips on shopping for cheap meat.
- Eggs— eggs are very nutritious, versatile, and filling—they’re the perfect staple food! Pasteurized eggs don’t contain salmonella bacteria either, so they’re safe to eat raw if you like to make meringue or custard based ice cream.
Just be sure to buy your eggs from a local farmer you trust who uses organic feed; here’s more information about finding safe eggs.
- Cook Almost Entire Meals with Vegetables—and very little meat or poultry too!
Learn how to “stretch” a meal by combining rice, beans, and veggies plus maybe some grains such as bulgur wheat, millet, or quinoa to make your own pilafs, soups, and casseroles that will fill you up without breaking the bank.
The more vegetables you eat, the less expensive your meals will be.
5 Buy Foods According to Seasons
Buy produce according to its season, so you get the best deal. When food is at its peak in season, it tastes better and costs less; you can also buy larger quantities and home can it, freeze it, or dehydrate it before it has a chance to spoil.
In addition, you may be able to buy locally grown produce, which usually isn’t shipped as far as out-of-season fruits and vegetables, so it loses fewer nutrients during transport. Check Facebook for local farmer’s markets, food co-ops, and fruit stands.
6 Eat Unexpected Foods That Are Cheap and Healthier!
Find cheap but tasty substitutions for expensive foods such as chicken breasts or red meat by eating foods that are often overlooked but are now more readily available and very inexpensive. You might try eating:
- Chicken legs (often on sale, especially around holidays like Easter). Be sure to remove the skin and cut off the excess fat. Then use the bone in your broth next time you make soup; this “bone broth” is a nutritional powerhouse that can help heal leaky gut syndrome, among many other health issues.
- Kidney beans for protein—most of us don’t get enough! Chop them up in your salad or eat as a vegetable side dish with meat (this combines two cheap sources of food at once).
Or cook them with a bit of bacon or onion and put them over toast for breakfast. Look online for more recipes using kidney beans or garbanzo beans, which are also very inexpensive.
- Frozen or Canned Tomatoes—an inexpensive way to add healthy, low-glycemic vegetables to your diet. When they’re in season (late summer), you can buy large quantities of tomatoes and freeze them for use during the winter months when fresh tomatoes are expensive or unavailable.
- Substitute Rice for Pasta- Rice is one of the cheapest foods around—look for bulk packages that cost less than a dollar. When served with beans and a salad or other vegetable dish, it can make a healthy and filling meal.
You could even use rice for breakfast; just add milk and fruit such as blueberries or strawberries to make your own oatmeal substitute.
Use brown rice instead of white to get more fiber, which will help keep you full longer, so you’re less tempted to snack on sugary processed foods throughout the day.
Brown rice also has better nutritional value than white rice because it contains magnesium (which helps prevent heart disease) and selenium (which reduces your risk of cancer).
- Frozen veggies—fresh produce is delicious, but if money’s tight (or if it doesn’t grow in your area), frozen vegetables are an excellent and nutritious substitute for fresh.
Stock up when they’re on sale, then keep them in the freezer, so they don’t go bad. Here are some tips for getting the most nutrition from frozen foods to help you prepare healthy meals even when money’s tight.
9 Buy Whole Foods First
Before buying processed food, consider how many other times you might use that same amount of money instead. For example, a whole chicken costs less than $5 and can be used in a number of ways: roasted, made into soup stock or “bone broth,” grilled with vegetables for a nice picnic lunch.
A whole chicken also makes great leftovers and can be used as an ingredient in other things, such as chicken bog. Check out this widely popular handy 1 chicken = 5 meals article for more affordable meal ideas.
10 Substitute Oatmeal for Rice
Rice is one of the most affordable grains you can buy in bulk, but oatmeal is equally affordable and more nutritious; it’s also easier to digest than many other grains, so it will keep you energized longer.
Buy oats at your local health food co-op since they’ll cost less than $1 per pound (versus $3-$4 per pound at most grocery stores). Here are some tips for using oatmeal in delicious recipes.
11 Use More Beans
Most people aren’t used to eating beans, but they’re full of protein and fiber, so they fill you up without all the extra calories found in many other foods. You can buy dried beans from a health food co-op or bulk store (or online) for less than $1 per pound; this is one of the cheapest sources of protein you’ll find! Here’s how to cook dried beans.
12 Skip Restaurant Meals and Cook Dinner at Home
As much as you might like to spend time with friends or family members over dinner, eating out is pretty expensive. Crockpot cooking is one of the healthiest and cheapest alternatives to eating out. Here are some fantastic slow cooker recipes for chicken, beef, pork, beans, and soup stock.
Alternatively, preparing homemade copycat recipes of your favorite restaurant dishes is another fantastic way to enjoy the flavor of your favorite foods without the high cost.
13 Avoid Sweetened Beverages of Any Kind
Soda and sweetened juices are full of sugar and other chemicals which raise your blood sugar quickly but then leave you hungry again a short time later.
Enhance plain water with slices of fresh lemon or lime (and some mint leaves if you have them) is free and delicious! You can also try juicing fruits or vegetables in an electric juicer. Or, if a juicer isn’t in the budget, here’s how to juice without a juicer.
You’ll need to buy the fruits and veggies whole since they’re much cheaper than buying already-juiced products, but you’ll also get all the nutrients found in the pulp. Buy fruit and vegetables in season; they’re usually less expensive at that time of year.
14 Skip Expensive Cheese for Bulk Cheddar
Cheese is one of those foods which taste great but cost a lot per pound. If you must have your cheese, try to find locally produced cheddar (which is sold in bulk) rather than imported cheeses since cheddar is usually made from milk produced by local farmers. Here are more tips for finding affordable cheese.
15 Try Soy-based Meat Replacements
Seitan or “wheat meat” may not sound very appetizing, but it’s cheap, high in protein, low in fat, and very filling. If you’ve never tried it, you might be surprised to find that it’s actually quite tasty! You can buy seitan in a package or make your own homemade “wheat meat” by following these easy instructions.
16 Make Your Own Sauces and Salad Dressings
Commercial salad dressings cost $3-$4 per bottle, but they’re relatively easy to make at home for much less money. You can also make your own sauces with seasonings blend that you buy as a spice (such as curry powder or cajun seasoning) by mixing them into coconut oil for a delicious and healthy spread you can use on bread or vegetables.
In conclusion, there are a number of ways to save money on groceries and beat the soaring cost of food. I invite you to view our guide to groceries under $300 a month to glean more fantastic and easy to implement tips.
- Food and Agriculture Organization of the United Nations (FAO) Food Price Index, World Food Situation
- Food Inflation Chart by Month and Year, USA Inflation Calculator
- Wall Street Journal, Meatpacking Industry Faces Overhaul
- Bloomberg Businessweek, “Soaring Cost of Food is forcing families to scrimp” 08/20/2021