It’s undeniable: grocery bills are straining household budgets across America. Over the last five years, food prices, encompassing both supermarket aisles and restaurant menus, have surged dramatically. And with predictions suggesting further increases, understanding the drivers behind these escalating costs is more critical than ever.
Since January 2019, American consumers have witnessed a staggering nearly 30% jump in food prices. This sharp increase, documented by the Consumer Price Index, has pushed many families to the brink, struggling to afford basic groceries. The affordability of food has become a constant topic of concern, dominating kitchen table conversations and news headlines since the onset of the COVID-19 pandemic. Even now, years later, the persistent rise in food prices remains a pressing issue. While nostalgic infographics detailing historical grocery costs offer a glimpse into the past, modern tools vividly illustrate the stark reality of price hikes across the board – from fresh produce to essential utilities and housing. This leaves us grappling with a fundamental question: what forces are truly behind the relentless climb in food prices?
The explanation, as expected, is multifaceted. A key indicator is the Consumer Price Index (CPI), which tracks the average change in prices consumers pay for everyday goods and services. The CPI is a crucial measure of inflation’s impact on daily living expenses. As illustrated below, the CPI for food in US cities has been on an upward trajectory since the mid-1970s, with a particularly sharp acceleration during and after the COVID-19 pandemic.
Federal Reserve Bank of St. Louis data reveals a clear upward trend in food prices. Several factors contribute to these increases. Supply chain disruptions initiated by the pandemic, coupled with rising fuel costs impacting transportation, explain some of the price hikes across produce, dairy, pantry staples, and meat. Specific food items have faced unique pressures. Egg prices, for instance, have been volatile due to disease outbreaks causing shortages. Similarly, tomato prices have experienced spikes related to hurricane damage in key growing regions. Global events also play a significant role. The ongoing Russia-Ukraine war has inflated the costs of grains and cooking oils, creating shortages that ripple through the prices of staples like bread. Furthermore, the increasing costs of essential agricultural inputs such as fertilizer and energy contribute to the elevated baseline prices of numerous common foods. Beyond these factors, broader economic forces like inflation and labor shortages, alongside the impact of grocery store mergers and consolidations, and even corporate pricing strategies, all contribute to the complex web driving up food costs for everyday consumers.
Unpacking the Price Hike: Key Factors Influencing Grocery Bills
While the escalating prices of food, both in supermarkets and restaurants, are influenced by a complex and ever-changing mix of factors, examining specific issues individually helps to illuminate why our grocery bills in 2024 are significantly higher than in 2019.
The Lingering Impact of COVID-19
The most immediate factor contributing to higher grocery prices is the COVID-19 pandemic. Safety measures like lockdowns and widespread staff shortages due to illness triggered widespread disruptions across global supply chains. Import prices soared, with some food goods entering the US West Coast ports from countries like China experiencing increases as high as 1,000 percent. Competition among grocery chains was skewed, as larger retailers leveraged their buying power to secure larger allocations of scarce goods. In essence, the flow of groceries to stores slowed, the cost of transporting goods increased, many stores faced inventory shortages unable to meet increased consumer demand, and ultimately, prices at the checkout surged.
Fuel and Transportation Costs: A Direct Link to Food Prices
Fuel costs are a major determinant of food prices in the United States. The relationship is so intertwined that, as the USDA has noted, consumer purchasing of fresh fruits and vegetables decreases when elevated fuel costs translate to more expensive produce. In 2019, the average price of regular gasoline was around $2.60 per gallon, while diesel averaged about $3.06 per gallon. By 2024, the national average for regular unleaded gasoline had risen to approximately $3.07 per gallon, and diesel reached about $3.55 per gallon. These increased fuel costs directly impact the prices retailers must charge for groceries and other goods to cover transportation expenses.
The Ripple Effect of Animal Diseases, Weather Extremes, and Crop Failures
Disease outbreaks and adverse weather events have a more profound impact on food prices than many realize. Egg prices, for example, have experienced significant fluctuations in recent years, largely due to avian flu outbreaks. When the highly pathogenic avian influenza (H5N1) first hit the US in 2022, eggs were priced around $2 per dozen. Prices peaked at $4.82 per dozen in January 2023. Even after the culling of over 123 million poultry birds in the US due to the virus, prices in December 2024 still hovered around $2.50 per dozen nationally. Specialty eggs, like cage-free, organic, or locally sourced varieties, command even higher prices, especially in regions with higher costs of living.
Wheat, a staple ingredient in countless foods from bread and pasta to snacks and cereals, has also faced shortages. The Russia-Ukraine war contributed to global wheat supply issues, compounded by drought-related domestic wheat crop failures in 2022 and 2023. Researchers described the 37 percent yield loss from that growing season as “Dust Bowl-like,” attributing spring and fall rain deficits to delayed crop development, reduced yields, and increased crop abandonment. Climate change is increasingly impacting the production of all types of food crops, from grains like wheat and corn to fruits, vegetables, livestock, and poultry.
While droughts cause significant shortages, excessive rainfall also disrupts food production. Climate change is associated with the formation of larger, more intense storms that occur more frequently and move more slowly. These trends are projected to continue. Crops grown in coastal areas, including a wide range of produce, livestock, and even a significant portion of the world’s pecan supply, are vulnerable to these stronger, slower-moving storms that unleash torrential rainfall. The resulting floods and prolonged wet conditions increase crop losses and disease vulnerability. Each weather-related shortage drives up the price of affected foods. Estimated crop losses from just two hurricanes could reach billions of dollars, ultimately impacting consumer food budgets.
Global Conflicts and Trade Barriers: Amplifying Food Price Volatility
Global food security suffered a major blow with Russia’s invasion of Ukraine, a significant exporter of wheat, corn, agricultural fertilizers, and oilseeds like sunflower and canola. Russia’s military actions directly targeted Ukraine’s agricultural infrastructure, including farming regions, shipping ports, and inland transportation routes, aiming to disrupt or halt Ukraine’s exports. International agreements and humanitarian efforts have partially mitigated these disruptions. However, Russia’s withdrawal from the Black Sea Grain Initiative, which ensured safe passage for Ukrainian grain exports through the Black Sea, poses a risk of renewed grain price surges in the future.
Inflation: The Broad Economic Pressure on Food Costs
The economic recovery following the COVID-19 pandemic led to widespread inflation across many nations, including the US. While inflation rates have reportedly eased from their peak in 2022, even smaller monthly price increases accumulate rapidly. Despite recent months showing lower monthly CPI increases for overall food costs, the cumulative inflation rate over the past five years is a substantial 23.4 percent. This means that a basket of groceries costing $100 in 2019 would now cost approximately $123.40, solely due to inflation, without considering other contributing factors.
The Cost of Labor: Fair Wages in the Food Supply Chain
Very few food items are purchased in their raw, unprocessed state. Even fresh produce undergoes a series of steps involving human labor – from harvesting, washing, and sorting to labeling, packaging, transportation, stocking, and checkout. Minimally processed foods like dried beans and milk involve even more labor-intensive steps such as drying, pasteurization, and packaging. Processed foods like bread require milling, mixing, baking, and equipment maintenance. Ultra-processed foods involve the production of every single ingredient, adding further layers of labor.
The entire food supply chain relies on the daily work of millions of individuals at every stage. These workers deserve fair, living wages. Increases in labor costs are often passed on to consumers. Since 2019, the food supply chain has experienced significant labor shortages, particularly during the initial years of the pandemic. These shortages have contributed to rising labor costs and, consequently, increased food prices.
Grocery Store Consolidation and Corporate Pricing Strategies
The increasing trend of mergers and acquisitions within the grocery industry threatens to further limit access to affordable, healthy food. Reduced competition among retailers due to consolidation can lead to higher prices. The proposed mega-merger between supermarket giants Kroger and Albertsons, recently blocked by a preliminary injunction, exemplified this concern. However, a pattern of smaller acquisitions and regional grocery chain mergers has persisted since 2018, contributing to reduced competition and potentially higher prices for consumers.
Investigations by the FTC have revealed that major retailers, including Kroger, Walmart, and Amazon, capitalized on rising costs during the COVID-19 pandemic to implement price gouging strategies, further inflating prices and boosting profits. During the Kroger-Albertsons merger trial, a Kroger executive admitted that the company raised prices on essential items like milk and eggs “significantly higher” than justified by inflation. Concerns about exploitative pricing practices have also surfaced in regional studies, highlighting price discrepancies in lower-income neighborhoods compared to wealthier areas. Notably, grocery chains that increased prices during pandemic-related shortages often failed to reduce prices once supply chain issues eased, resulting in sustained higher costs for consumers while retailer profit margins have expanded significantly. The CEOs of the largest grocery retailers have also seen substantial compensation increases, reaching multi-million dollar figures annually.
A Perfect Storm Fueling Food Insecurity
The confluence of historically high food prices and stagnant income growth is creating a perfect storm for food insecurity in America. When combined with a nearly 20% increase in the price of all goods since 2019, soaring housing costs, and a real median income that has not kept pace, many American families are facing severe financial strain.
The impact is disproportionately felt by lower-income households. Households in the lowest income bracket spend a significantly larger percentage of their income on food compared to higher-income households. Consequently, the number of food-insecure households in America, those lacking consistent access to adequate food, has risen sharply from 2019 to 2024, representing millions more Americans, including children, struggling with hunger.
Fighting Food Insecurity: Initiatives for Change
Organizations like CSPI are actively working to combat food insecurity through various initiatives. Their advocacy for programs like the Healthy, Hunger-Free Kids Act, National School Breakfast and Lunch Programs, SNAP, WIC, and Summer EBT plays a crucial role in ensuring children have access to nutritious meals, especially as food costs continue to climb. With the 2024 Farm Bill still under debate, public support for child nutrition programs and access to healthy foods is vital.
Recognizing the growing issue of food deserts, CSPI has also engaged with major retailers like Dollar General to expand healthy food options in underserved communities. Dollar General has since expanded fresh produce offerings to thousands of stores, improving food access in areas lacking full-service grocery stores.
Sustaining these efforts requires ongoing support. Non-profit organizations like CSPI rely on public donations to continue their work advocating for food security and affordability, independent of industry or government funding.
