Grocery prices are soaring, so high, food costs in 2020 are the highest they’ve been in the past decade, according to USDA data.
PHOENIX — Grocery prices are soaring, so high, food costs in 2020 are the highest they’ve been in the past decade, according to USDA data.
So, what’s causing the spike in prices and what can families do to save more and spend less?
How much have food prices increased over the past year?
“We saw that food prices increased on average 3.4% according to the Bureau of Labor statistics,” said Matt MacLachlan, USDA Economic Research Service Economist.
It’s not something you want to hear when you’re headed to the grocery store, but the fact is, food prices have significantly increased over the past year.
Food prices increased the most in a decade in 2020
“This was fairly high relative to the 5 previous years,” he said. “You have to go all the way back to 2011 to see a price increase this large, when it was 3.7%.”
“There are a lot of costs that are involved in what drives those prices up and down,” said Lauren Chenarides, assistant professor at ASU’s Morrison School of Agri-business in the W.P. Carey School of Business.
Uncertainty surrounding the pandemic = higher food prices
She says rising food costs are all based on how much it costs to produce the food you buy and how much consumers are willing to purchase it at.
“Some products are going to be more costly to produce depending on the steps that are involved in going from farm to table,” Chenarides said.
There’s no doubt, the uncertainty surrounding the pandemic has had a direct impact on short-term price effects.
“Things like the additional clearing and sanitation protocols… the different hours of operation and those are all additional costs that the retailer has to pay, and we might see those passed through to us,” she said.
Ways to save more and spend less during food price spike
There are some simple things you can do to save more and spend less.
“Purchasing in bulk, trying to reduce the prepared foods that we purchase, really setting budgets and looking for price promotions.,” Chenarides said. “I don’t think we should look at it as a doom and gloom story.”
Research economists say predictions for 2021 look much better
In fact, the Economic Research Service projects a more positive outlook in year ahead.
“We expect them to rise more slowly than they did in 2020, so we right now are forecasting price inflation between 1 and 2% for our all food prices category,” said MacLachlan.
That percentage isn’t only lower than it was last year, but also much more in line with historical norms.