It’s no secret that food prices are on the rise. The long tentacles of inflation are being felt everywhere, from astronomical rents, to sky-high home heating prices, and perhaps most prominently at the grocery store. While overall consumer prices increased 8.2% from September 2021 to September 2022, the grocery inflation rate was even steeper at 13% over the same period. The pain hasn’t been felt evenly though, with different products seeing their prices change in divergent ways. For example, while the price for chicken breasts is up nearly 35% from a year ago, driven mainly by a combination of high feed costs and a historic avian flu outbreak, the price for a USDA Choice sirloin steak is actually down 4.2% over the same period. There’s also evidence emerging that soaring grocery prices may not solely be the result of companies covering their increased costs, but also some degree of profiteering. Food giants like PepsiCo, Coca-Cola, and Conagra have all recently reported record profits, with their price increases often pointed to as one of the core contributing factors. So how does one find some relief from the ever changing and more challenging grocery store conundrum? Studying the details of the price changes may offer some clues.
The Cost of Carbonara
In many circles Spaghetti Carbonara is regarded as a superb culinary creation, but beyond its delectable flavors it’s also a good display of the macroeconomic pricing dynamics currently impacting your shopping cart. By evaluating its constituent components we can get a taste of why reviewing those supermarket receipts is especially painful at the moment. We’ll use a basic recipe here to keep things simple.
- 1 pound of pasta: Nationally the price for a pound of spaghetti is up 26% over a year. That pound of spaghetti will now cost you $1.36. As is the case with many grocery items there are a combination of factors at play. The war in Ukraine tamped down the global supply of the Durum wheat used to make pasta and rising energy costs are making farming more expensive across the globe. Most notably though, extreme weather in Canada, which is the largest supplier of Durum wheat in the world, caused harvest yields to fall sharply, further decreasing the global supply. In addition to these factors, the price of oil has risen dramatically since early 2019, which means that transportation costs are higher, driving up the price of everything shipped.
- 1 pound of bacon: Bacon is another product where the price increase has been dramatic. A pound of bacon went from $5.60 in September 2020 to $7.38 in September 2022. While over the course of the last year the price increase has been less meteoric, at only 2.3%, that's partly because pork had already seen a substantial price increase earlier in the pandemic. This was once again driven by a backdrop of higher prices for pork producers from factors such as increased energy, transportation, and feed costs, as well as an increase in prices driven by “consumer’s willingness to pay.”
- A half dozen eggs: Eggs have become a poster child of the recent price increases, with a dozen eggs 58% more expensive in September 2022 than they were a year earlier. The sticker shock is particularly strong here. Egg prices are once again being driven by a multitude of factors, but the aforementioned Avian Flu outbreak is an especially prominent factor. Nonetheless, the same increased production costs of feed, fuel, and transportation are further contributing as well.
- 3 oz. of Parmesan: This italian cheese has always been a bit of a luxury item, but its high flying status doesn’t make it immune from the tide of rising prices. The 3 oz. of parmesan used in our carbonara recipe will cost you 12% more than it did a year ago.
Taken together the all-in cost of this batch of Spaghetti Carbonara went from $11.56 in September of 2021 to $12.89 in September of 2022. That 11.5% increase in cost actually means this dish still beats the overall inflationary pressure slightly, coming in 1.5% under the 13% overall grocery inflation rate. While the $1.32 total cost increase may not seem like a lot, when you multiply that rate of price increase across your shopping cart the pain becomes much more pronounced.
Meatballs: An Uneven Grocery Inflation Rate
There are some items; however, which have bucked the grocery inflation rate trend. For example, beef and veal as a category are down 1.1% from over a year ago. Fresh produce as a category is also seeing prices increase at a substantially lower rate than groceries overall, coming in at 8.7% year over year. Certain fruits and vegetables are relatively more affordable than others as well, with the prices of apples rising only 6% and tomato prices actually decreasing 1% relative to a year ago. So perhaps now’s the perfect time to make some Italian meatballs with tomato sauce and roasted vegetables on the side?
Navigating The Rising Tide of Prices
It’s clear that rising grocery prices present a growing challenge to many people. It’s times like these when we start to pay more attention to how much things cost. While in a low inflationary environment it wasn’t as pressing to know exactly how much we spent on that dozen of eggs, gallon of milk, or pound of parmesan, the luxury of price ignorance is no longer one we can afford. But all is not lost either, there are many practical steps we can take to relieve some of the pain:
- Plan your meals: As we covered in our previous post focused on how meal planning can save you money, this practice can save you substantial cash. A family of four can easily save north of $13,000 per year by simply starting a meal plan. By helping you reduce waste, eliminate impulse purchases, and include recipes with lower priced ingredients, this practice has a big impact.
- Buy in bulk: When possible buy items in bulk to restock your pantry. Buying in larger quantities usually results in lower unit prices.
- Leverage sales: Being flexible and adjusting your purchase patterns to match sales can add up to significant savings. Furthermore if you’re able to buy items in bulk while on sale you’ll see an even greater impact. Restock your supplies opportunistically when prices are low.
- Consider discount grocers: Discount grocers often sport substantially lower prices than your standard grocery store. Search to see if there’s one nearby such as an Aldi or Food4Less to win big on prices. It may very well be worth a bit of extra expense on gasoline to drive to one of these discount grocers.
- Use apps: There are now a multitude of apps that can save you money on groceries. We even compiled a list of apps to save money on groceries, which is a good place to start.
And finally, as we mentioned earlier, pay attention to prices. While the above are all common sense tactics to save money at the grocery store at any time, during this period with a particularly steep grocery inflation rate, it’s especially important to have a sense of how prices are moving. Price increases aren’t happening equally, and tactics such as shifting away from chicken breast in favor of a cheaper protein, adding in more roasted veggies, and eating more apples instead of oranges can add up to substantial savings. Hopefully this post inspires you to take a closer look at the price tags next time you shop, and you might be able to realize some relief from all the rising prices after all.
PS: For a detailed list of the grocery inflation rate for each grocery category visit the Bureau of Labor Statistics website.