WASHINGTON – After 10 years of steady decline, more supermarket shoppers are using coupons again.
And discount warehouses such as Costco, Sam’s Club and BJ’s Wholesale Club are seeing a jump in business from people buying groceries in bulk.
Both trends are evidence of the ways American families are grappling with a 7.5 percent jump in the price of food consumed at home over the past 12 months. Prices for all foods and beverages are up an average of 5.9 percent. It’s against this stark backdrop that voters will select the next president Nov. 4.
“For all the money the government spends on things that are not necessary, I think they should be focusing more on families,” said Jenny Minton, a Palm Bay, Fla., mother who clips coupons, shops the sales, and now, even has visited a food pantry operated by her church to feed her large family.
How bad is inflation? The last time food prices jump this much was in the early 1970s, according to Bruce Babcock, an economist and director of the Center for Agricultural and Rural Development at Iowa State University. Back then, the major causes were a drop in the value of the dollar, Russia’s move to corner the wheat market, crop shortages and a big increase in commodity prices.
This time, world demand for basic commodities is on the rise. Rising incomes in India and China are allowing people there to eat more meat. Higher fuel prices have increased the cost for farmers to operate farm equipment and transport their crops. And the effort to increase corn-based ethanol production in the United States has pressed corn prices higher.
For many affluent families, the increase in food prices has forced them to cut back on eating out at full-service restaurants.
But for lower income families – who already were less likely to eat out – the rising cost of basic groceries is causing them to cut back elsewhere or seek help.
Cereal and bakery products cost 11.7 percent more than they did a year ago. Fruits and vegetables are up 12 percent.
According to the Department of Agriculture, low-income families eat fewer fruits and vegetables than the average American family in large part because of cost. Families in the lowest 20 percent of income spent $1,878 per person on food in 2006, the latest year government figures are available, compared with a national average of $2,444 per person.
“These are staples for most families and it’s a very serious problem,” said Carol Foreman Tucker, director of the Food Policy Institute at the Consumer Federation of America.
“Unemployment is now up to 6 percent. Incomes are fairly stagnant. And when you have these two forces come together, the increased food price and the lack of a comparable increase in wages, you are making families very uncomfortable,” Tucker said. “For low-income people, those who have to rely on public benefits, it’s especially difficult because those benefits are not going to increase.”
FOR MORE INFORMATION
www.fuelgaugereport.com/index.asp, American Automobile Association’s “fuel gauge report” on average gasoline prices.
www.fuelgaugereport.com/sbsavg.asp, Average gasoline prices listed by state.
www.ers.usda.gov/Publications/EIB6-5/EIB6-5.pdf, The Food Assistance Landscape FY 2007 annual report.
www.ers.usda.gov/Briefing/CPIFoodAndExpenditures, U.S. Department of Agriculture’s economic research service briefing room on food prices and expenditures.
www.chicagofed.org/publications/fedletter/cfloctober2008(UNDERSCORE)255 .pdf, Chicago Federal Reserve essay on “Food inflation and the consumption patterns of U.S. households.”
www.ers.usda.gov/Publications/ERR61, National School Lunch Program.
Demand for government food assistance programs has spiked. According to the latest federal data available, June saw the following increases over last year:
Food stamp participants, up 2 million to 28.6 million.
Students receiving free or reduced-cost school lunches, up 500,000 to 31.5 million.
The school breakfast program, up by 400,000 to 10.2 million.
Pregnant women and mothers with small children participating in the Women, Infants and Children program, up 400,000 to 8.7 million.