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.
For a typical dollar spent in 2023 by U.S. consumers on domestically produced food, a combined 26.1 cents went to wholesale (11.4 cents) and retail (14.7 cents) trade establishments such as grocery stores, wholesale clubs, restaurant supply stores, and other food distribution outlets. After reaching a series high at a combined 28.2 cents in 2020, both the wholesale and retail trade shares have remained above their series averages of 10.6 cents and 13.9 cents, respectively. In 2023, food services was 31.5 cents, and food processing continued its trend downward to 13.2 cents, its lowest share since 1993, the first year recorded in the series.
In 2023, nominal (i.e., not adjusted for inflation) food expenditures by U.S. consumers, businesses, and government entities reached $2.6 trillion, up from $2.4 trillion in 2022. This increase was mainly driven by growth in food-away-from-home spending, climbing from $1.3 trillion in 2022 to $1.5 trillion in 2023. Meanwhile, food-at-home spending increased from $1 trillion in 2022 to $1.1 trillion in 2023. Food-away-from-home expenditures accounted for 58.5 percent of total food expenditures in 2023—their highest share of total food spending observed in the series.
U.S. consumers spent an average of 11.2 percent of their disposable personal incomes on food in 2023, unchanged from 2022. However, there were notable shifts in the composition of food spending. From 2022 to 2023, consumers’ budget share allocated to food-at-home spending decreased from 5.6 percent to 5.3 percent, while the share allocated to food-away-from-home spending increased from 5.6 percent to 5.9 percent. In 2023, the share of income spent on food-away-from-home reached its highest point since the series began, reflecting the ongoing upward trend observed prior to the Coronavirus (COVID-19) pandemic.
As their incomes rise, U.S. households spend more money on food, but it represents a smaller share of their income. In 2023, households in the lowest income quintile spent an average of $5,278 on food (representing 32.6 percent of after-tax income). Households in the middle income quintile spent an average of $8,989 on food in 2023 (representing 13.5 percent of after-tax income). In 2023, households in the highest income quintile spent an average of $16,996 on food (representing 8.1 percent of after-tax income).