Food Prices: What the Eff is Going On?
Food is too expensive
Every single time we complete a transaction these days, we walk away feeling like we just got ripped off, tricked… as if the economy itself just pointed at a stain on our shirt, only for us to look downward at the same time it swipes its invisible hand right up into our gullible face (it was an intentional Adam Smith reference, for all you economists out there).
So let’s take a look and see what’s going on under the hood.
Are food prices going up as much as it feels like they are? 📈
Unfortunately, yeah. The USDA tracks food prices for “food away from home” (restaurants) and “food at home” (grocery stores), and both have increased roughly 25% since 2020. That means your $20 lunch from 4 years ago is now $25.
But aren't prices always going up? 🔎
Yup! This is true. Prices go up over time, which is not necessarily a bad thing. Consensus among economists is that 2% inflation (price increase) each year is good for the U.S. economy. Let's take a look at how much food prices have increased every year since the 1968.
Even though prices go up every year, the price of food has clearly increased more than average lately (btw, those crazy numbers from the 70s are from a massive boom in the price of commodities like oil and agricultural products).
Is it because of shrinkflation? 🪄
Eh, not really. Shrinkflation is when a company decreases the amount of product you get without lowering the price, and it sucks super hard. BUT, shrinkflation is actually factored into these price increases already, and it turns out that it hasn't contributed much (only about 10% of the spike). Though, it might be extra noticeable because snacks like chips and cookies are the biggest offenders.
So is the increase just random? 🎲
NOPE. It's actually a classic American story of the big guy stepping on on the little guy, at least according to the Economic Policy Institute (we're paraphrasing... with some artistic liberty). Allow us to explain.
Generally speaking, corporations raise their prices to cover an increase in their operating expenses. For example, let's say you are the CEO of Dunkin' Donuts (congrats, that's epic). If coffee beans get more expensive, you kinda have to raise the price of your coffee to cover those costs. If the wages of your baristas go up, you probably have to raise the price of your coffee to cover those costs. But just covering costs isn't enough, you need to make a profit to keep those shareholders happy so they can keep ignoring their families. So you raise coffee prices a little more, on top of what you already did to cover your costs.
Turns out, on average, corporations have been doing a lot more of that price raising than usual...
You remember that $20 lunch from four years ago that now costs $25? Well this graph says that $2.50 of that $5 increase is going straight toward corporate profit now, whereas for the last 40 years, only $0.50 of that lunch goes toward profit margin 😐
The theory is that business take advantage of periods of inflation and raise prices more than they have to. The cool kids call it "greedflation."
Am I doomed to suffer high prices? 😔
Uhh like a little, but not as much as you'd think. Some foods experience much more inflation than others. For example, in 2022, processed fruits and veggies (frozen, pre-cut, etc.) got more expensive at a rate 8x faster than the fresh version. Last year, every single meat got more expensive, but pork actually got less expensive. All this to say, a bit of confidence and knowledge in the kitchen can free you from a lot of stuff that's out of your control.
If you're wondering, we waded through this boring-ass spreadsheet for this info.
A final note
When we think about helping people become more independent through food, a big part of that includes financial freedom. We want to give you the tools and knowledge to live a happy life, and sometimes that means being able to be flexible in how you eat. It's a lot harder to fight against the price of chicken if you only know how to cook chicken, ya know? At then end of the day, we don't really care what you eat, we just care that you're doing it by choice, not because you're stuck.