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Feb. 22, 2024 By Jesse Newman and Heather Haddon, Wall Street Journal The last time Americans spent this much of their money on food, George H.W. Bush was in office, "Terminator 2: Judgment Day" was in theaters and C+C Music Factory was rocking the Billboard charts. Eating continues to cost more, even as overall inflation has eased from the blistering pace consumers endured throughout much of 2022 and 2023. Prices at restaurants and other eateries were up 5.1% last month compared with January 2023, while grocery costs increased 1.2% during the same period, Labor Department data show. Relief isn't likely to arrive soon. Restaurant and food company executives said they are still grappling with rising labor costs and some ingredients, such as cocoa, that are only getting more expensive. Consumers, they said, will find ways to cope. "If you look historically after periods of inflation, there's really no period you could point to where [food] prices go back down," said Steve Cahillane, chief executive of snack giant Kellanova, in an interview. "They tend to be sticky." In 1991, U.S. consumers spent 11.4% of their disposable personal income on food, according to data from the U.S. Agriculture Department. At the time, households were still dealing with steep food-price increases following an inflationary period during the 1970s. More than three decades later, food spending has reattained that level, USDA data shows. In 2022, consumers spent 11.3% of their disposable income on food, according to the most recent USDA data available. Many diners have said they are going out less frequently or skipping appetizers, while buying cheaper store brands more frequently at supermarkets and seeking out promotions or deals offered via apps. That is starting to chip away at some sales for food makers and restaurant operators. Food companies said they are feeling pinched themselves. While commodities such as corn, wheat, coffee beans and chicken have gotten cheaper, prices for sugar, beef and french fries are still high or rising. Companies across the U.S. economy have also raised prices beyond covering their own higher expenses, lifting profits for industries including retail, biotech and manufacturing. Food inflation has raised the ire of President Biden, who took to Instagram during the Super Bowl to blast food makers that he said were providing less bang for consumers' buck--putting fewer chips in each bag or shrinking the size of ice-cream containers. "The American public is tired of being played for suckers," Biden said. "I've had enough of what they call shrinkflation. It's a rip-off." David Chavern, CEO of the Consumer Brands Association, which represents major food manufacturers, said the industry offers many choices at different price points. "We hope to work with the president on real solutions that benefit consumers," he said. In suburban Chicago, Lisa Wister said her food bills are rising faster than her family's income, leading them to make their own granola from scratch and pack their own snacks for the movies. "Everything is a negotiation, an analysis about our budget," said Wister, an occupational therapist. "It's exhausting." To read the entire article click here. Tweet |
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