Food prices are no longer rising as much — but here's why it might not feel that way
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PepsiCo said sales of its Frito-Lay snacks slumped in the most recent quarter as shoppers became more sensitive to rising prices.Justin Sullivan / Getty Images North America -
Grocery prices rose just a little over 1% in the last 12 months, according to the latest consumer inflation report, out this week.Frederic J. Brown / AFP via Getty Images
Grocery prices are no longer climbing as much as they did in the last two years — but many Americans are still frustrated by what it costs to put food on the table.
Some people have apparently hit their limit. One of the biggest snack makers said this week that its sales fell this spring as grocery shoppers became more sensitive to rising prices.
Here are three things to know about food prices these days — and why it still feels more expensive at the checkout lane of your favorite grocery store.
What is going on with food prices?
It may not feel like it, but grocery prices have actually leveled off for the most part.
The latest consumer inflation report, out this week, showed grocery prices rose just a little over 1% in the last 12 months. That's a big improvement from the previous year, when prices jumped nearly 5%, and the year before that, when they soared by double digits.
However, leveling off is not the same as prices coming down, and the U.S. is still feeling the cumulative effect of those earlier increases.
And that leads to frustration for shoppers like Cindy Seinar, a retired autoworker in Lynchburg, Virginia.
"You go in for one thing, and you come out and it's $45," she says, describing her experiences at the grocery store.
And for Seinar, just like for many other Americans, the frustration is compounded by "shrinkflation." That's when companies reduce package sizes, meaning you get less than you used to for the same or sometimes even higher prices.
"Sugar is only 4 pounds," Seinar says. "You’re not even getting a 5-pound bag anymore."
Grocery prices are particularly noticeable because they are such a significant chunk of the typical family's budget, accounting for about 8% on average, according to government data. For lower-income families, it's often more than that.
How are people adjusting to higher prices?
For a while, many people just gritted their teeth and paid up — but Americans are starting to push back.
PepsiCo, which reported earnings this week, said sales of its Frito-Lay snacks actually fell during the most recent quarter. Some of that is because shoppers are balking at the higher prices by cutting back on chips altogether or by switching to cheaper store brands.
Amanda Whitworth stocks grocery shelves at a Target store in Florida. She often finds herself steering customers to the in-house bargains at the discount retailer.
"You may not ever have considered the Market Pantry bread, but it's $1.39 for a big loaf of it," Whitworth says, referring to Target's private label. "While that may not be someone's first choice, it's a quarter of the price of some loaves."
Whitworth also does the food shopping for her family and says she has made similar substitutions of her own.
"Before, we would have bought a big bag of frozen chicken nuggets for our son. And the particular bag went up three extra dollars," Whitworth says. "So we started making homemade chicken nuggets, which we'll probably never switch back because they're so good."
That sends a message to the big food producers. When PepsiCo and others start losing market share, they grow more cautious about pushing up prices. In some cases, they start to offer discounts — and that's one reason grocery prices aren't climbing as fast as they had been.
So are grocery prices finally going to come down?
To some degree.
The prices of some individual grocery items have come down. Fruit and vegetable prices have dropped over the last year, for example. So have milk and cheese prices.
However, the overall cost of groceries is unlikely to fall substantially.
But there is a silver lining. As grocery inflation slows, wages are catching up.
Over the last year, average wages have risen 3.9%, or about three and a half times as fast as grocery prices.
The typical worker now has to work about the same number of hours to buy a week's worth of groceries as in 2019, before the COVID-19 pandemic.
That's good news — even if for many Americans it doesn't feel that way.
Transcript
SCOTT SIMON, HOST:
How much would you pay for a bag of potato chips? Well, some people are apparently hitting their limit. One of the biggest snackmakers say that its sales fell this spring because of rising prices. Grocery prices are not climbing nearly as fast as they had been, but many Americans are still frustrated by what it costs to put food on the table. NPR's Scott Horsley joins us. Scott, thanks for being with us.
SCOTT HORSLEY, BYLINE: Good morning. Good to be with you.
SIMON: Of course, a lot of people will be in supermarkets this weekend. What kind of prices might they see?
HORSLEY: Well, the good news is supermarket prices have largely leveled off. We got an inflation report this past week showing grocery prices rose just a little over 1% in the last 12 months. That is a big improvement from the previous year, when prices jumped almost 5%, and the year before that, when they soared by double digits. But leveling off is not the same as coming down, and we are still dealing with the cumulative effect of all those earlier price increases. When we asked NPR listeners, where do you feel the sting of inflation most? - a lot of people said the supermarket.
CINDY SIENAR: I think that groceries stand out the most just because we're always at the grocery store, and you have to eat.
HORSLEY: Cindy Sienar is a retired autoworker who lives in Virginia. Like a lot of people, she's bothered by what economists call shrinkflation and the feeling she's paying more and getting less.
SIENAR: You go in for one thing, and you come out, and it's $45. And sugar is only four pounds. You're not even getting a five-pound bag anymore.
HORSLEY: And people notice because, you know, they buy groceries week after week. It's a significant chunk of the typical family's budget, about 8% on average. For lower-income families, it's often more than that.
SIMON: And how are people reacting to these higher prices?
HORSLEY: You know, for a while, they just grit their teeth and paid up, but we are starting to see more pushback now. Pepsi, which reported its earnings this past week, said, sales of FritoLay snacks were actually down during the most recent quarter, which suggests we have reached the crunch point on tortilla chips. You know, maybe shoppers are cutting back altogether or they're switching to cheaper store brands.
Amanda Whitworth stocks grocery shelves at a Target store in Florida. She often steers customers to the discount retailer's in-house bargains.
AMANDA WHITWORTH: I like being able to point people in certain directions and be like, well, you may not have ever considered the market pantry bread, but it's $1.39 for a big loaf of it. And you know, while that might not be someone's first choice, you know, it's a quarter of the price of some loafs.
HORSLEY: Whitworth also does the food shopping for her family and says she's made some substitutions of her own.
WHITWORTH: Before, we would have bought a big bag of frozen chicken nuggets for our son, and the particular bag went up three extra dollars, and at that point, I was like, oh, goodness. So we started making homemade chicken nuggets, which - we'll probably never switch back 'cause they're so good.
HORSLEY: That sends a message to the big food producers. You know, when Pepsi and others start losing market share, they get more cautious about raising prices, and, in some cases, they start to offer discounts.
SIMON: Scott, are food prices, grocery prices, likely to come down any time soon?
HORSLEY: You know, the price of some individual items will certainly come down. We've seen that over the last year with fruits and vegetables and milk and cheese. But in terms of what you pay at checkout for the whole grocery cart, that's not likely to drop very much.
The good news is as grocery prices level off, wages are catching up. Over the last year, average wages have risen about 3 1/2 times as fast as grocery prices. So one way to think about this is, how long do I have to work to buy a week's worth of groceries? For the typical worker, it now takes about the same number of hours as it did back in 2019, even if it doesn't yet feel that way.
SIMON: NPR's Scott Horsley. Thanks so much.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
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