Food Prices and Spending
Retail food prices partially reflect farm-level commodity prices, but other costs of bringing food to the market (such as processing and retailing) have a greater role in determining prices on supermarket shelves and restaurant menus. Monthly price swings in grocery stores for individual food categories, as measured by the Consumer Price Index (CPI), tend to smooth out into modest yearly increases for food in general. In 2023, U.S. consumers, businesses, and government entities spent $2.6 trillion on food and beverages.
Average annual food-at-home prices were 5.0 percent higher in 2023 than in 2022. For context, the 20-year historical level of retail food price inflation is 2.5 percent per year. Price growth slowed in 2023 compared with 2022, when food-at-home prices rose by 11.4 percent. Prices for fats and oils rose the fastest in 2023 (9.0 percent), followed by sugar and sweets (8.7 percent), and cereals and bakery products (8.4 percent). Pork was the only category to decline in price in 2023, by 1.2 percent. Prices for several categories grew more slowly than their historical averages, including beef and veal (3.6 percent), eggs (1.4 percent), fresh vegetables (0.9 percent), fresh fruits (0.7 percent), and fish and seafood (0.3 percent).
From 2019 to 2023, the all-food Consumer Price Index (CPI) rose by 25.0 percent—a higher increase than the all-items CPI, which grew 19.2 percent over the same period. Food price increases were below the 27.1-percent increase in transportation costs, but they rose faster than housing, medical care, and all other major categories. Food price increases in 2020–21 were largely driven by shifting consumption patterns and supply chain disruptions resulting from the Coronavirus (COVID-19) pandemic. In 2022, food prices increased faster than any year since 1979, partly due to a highly pathogenic avian influenza outbreak that affected egg and poultry prices and the conflict in Ukraine which compounded other economy-wide inflationary pressures such as high energy costs. Food price growth slowed in 2023 as wholesale food prices and these other inflationary factors eased from 2022.
Corn, wheat, and soybeans are the top three U.S. field crops and comprise the majority of field crop inputs to the U.S. food supply. The average farm price of these crops, weighted by total production, regularly rises or falls by more than 10 percent from one year to the next. However, these price swings have relatively small impacts on food prices. In 2023, the production-weighted price of these crops fell by 12.1 percent, while food prices increased by 5.8 percent. Intermediate foods and feeds price fluctuations generally fall between swings in field crop and food prices.
Food and fuel prices are typically more volatile than other consumer spending categories, but the price swings differ in size. Over the past two decades, motor fuel prices often experienced double-digit annual price swings, and the average annual change in food prices (3.0 percent) was lower than household energy (3.3 percent) and motor fuel prices (5.9 percent). In 2023, food prices grew by 5.8 percent, while household energy prices increased by 1.6 percent and motor fuel prices declined by 10.6 percent following relatively large increases for each of these categories in 2022.