The price of eggs and bread is skyrocketing – a trend that particularly penalizes the poorest Americans.
Average food prices rose at an annualized rate of 10.4% in June, the Bureau of Labor Statistics reported on July 13, 2022. The gains were mainly driven by the cost of groceries, which has the jumped the most since the 1970s, by 12.2%. Headline inflation increased by 9.1% compared to the previous year.
These sharp increases surprised consumers, largely because food prices had risen moderately for decades.
While all Americans have seen their grocery bills soar, many may not fully appreciate the enormous burden rising food prices are placing on low-income households. The reason is simple: poor families spend a much larger share of their income on food than the median household.
In 2020, the average middle-income American family spent about 12% of their income on food. In contrast, poor households spent 27% on food that year.
What explains this huge discrepancy? The answer begins with a dramatic shift in spending habits of American households during the 20th century, which I learned from researching changes in commuting practices.
In the 1900s, the necessities of life, including food, were extremely expensive compared to today, leaving little room for spending on other goods or services for most Americans, according to a study in 2006 by the Ministry of Labour. On average, American families spent more than 40% of their income on food in 1901, 23% on housing, and 14% on clothing.
But the relative cost of food and clothing fell steadily over the next 100 years. In 2002, the two categories accounted for just 17.3% of a middle-class family’s spending, and by 2020 that figure had fallen to 14.2%.
The sharp decline in the cost of food and clothing has led to a massive reshuffling of family budgets over the last century or so. As people reduced their spending on these items, they spent more on housing, transportation, and insurance. As the country got richer, discretionary spending also increased. Most Americans had more room in their budget for restaurants, televisions, and entertainment.
This revolution in household spending has largely excluded poor Americans, who continue to spend most of their income on feeding their families and other necessities like housing. Therefore, they are particularly vulnerable to food price spikes.
Low-income households spend more than twice as much of their budget on food as middle-income households. As a result, food inflation is about twice as heavy for families with limited means. But this actually underestimates the burden of high food costs for the poor because, unlike middle-class families, they have little discretionary spending that they can reduce to free up funds for food.
American households are reacting to soaring food inflation by eating out less often, buying generic brands and consuming less meat. For many, this may be the first time they have had to be so careful about what they spend on food.
Poor families, however, have long been forced to deploy these tactics to control their food spending.
An estimated 38 million Americans are food insecure, which means they lack the means to get enough food. The problem is that with food inflation rising at the current rate, more families will face the prospect of not knowing where their next meal will come from.
David Soll, Associate Professor of History and Environmental Studies, University of Wisconsin, Eau Claire
This article is republished from The Conversation under a Creative Commons license. Read the original article.