Is Your Grocery Bill Going Up?
It may feel like every time you even step into a grocery store, the prices have gone up. The reality is that American consumers spend a lot of money on food every month. In 2000, the average family of two adults, aged 50 and older, spent $500.00 a month on groceries, according to the U.S. Department of Agriculture. In 2012, that number increased to $700.00. That amount only includes food prepared at home, and not money spent eating out at restaurants, which would cause the number to go up even more.
And it might even be much higher than that. A 2012 Gallup poll found that one in 10 American families spends $300.00 or more on groceries every week—that’s $1,200 a month! But before you lock up the pantry and institute a family diet plan to lower your grocery bill, you should also know that, because of inflation, Americans are actually spending less on food than they did in the 1980s, says the Gallup poll, which has been tracking food spending since the 80s. After adjusting for inflation, the poll found that Americans spent about $124.00 a week in 2010, compared to a high of $150.00 in 1989.
But the problem is that, since we rely on food producers all over the world for our food, any climate effects or crop issues, even in countries far away, affect our food and our processes. This happens on our own soil, too. That’s one of the reasons why food prices are expected to rise in 2013.
“The effects of food inflation driven by the North American droughts of 2012 will be felt mostly in the first half of 2013,” said Michael McCain, Maple Leaf president and chief executive, after the company released its earnings for 2012. The drought that hit the U.S. Midwest last year—the worst one we’ve seen since the 1950s—caused corn and grain prices to shoot up. But the price hikes aren’t over, as Maple Leaf reminded us, the U.S. Department of Agriculture says that the droughts will cause food prices to rise another three to four percent this year.
With an economy that hasn’t caught up yet to its pre-recession glory, rising food prices are a big concern for the average American. In a January 2013 Gallup poll of 1,016 adults, 76% of respondents said the price of food was “hurting” their family finances. The number jumped to 80% for low-income respondents (a yearly income of less than 24,000).
So how can you spend less of your hard-earned money on groceries? Here are the top four tips we recommend:
1. Track: Spend one month writing down all your food-related purchases (including money spent on eating out—and don’t forget about all those coffees or little snacks), then add it up.
2. Budget: Take a look at the amount—if it shocks you, then it’s time to start a budget. That doesn’t mean you can’t buy things you enjoy. Every person’s budget should be tailored to his or her own needs. If you like fancy dining, include that in your budget. But once you know how much you can afford to spend each month, you’ll be less likely to indulge on small convenience-store snacks throughout the week.
3. Save: Look out for coupons; did you know that billions of dollars in coupons are wasted every day? You can get these online or in your newspapers, and even at the entrance to some of your favorite grocery stores.
4. Revise: Make sure you revise your budget a few times a year, so that you can see if it’s been realistic. If you’re constantly overspending, ask yourself why. If you got a raise and want to spend one night out a week, then include it.
“Cost of Food at Home,” U.S. Department of Agriculture, January 2013; http://www.cnpp.usda.gov/usdafoodcost-home.htm.
Mendes, E., “Americans Spend $151 a Week on Food; the High-Income, $180,” Gallup, August 12, 2012; http://www.gallup.com/poll/156416/americans-spend-151-week-food-high-income-180.aspx.
Newport, F., “Prices of Energy, Food Hurt Americans’ Finances Most,” Gallup January 25, 2013; http://www.gallup.com/poll/160106/prices-energy-food-hurt-americans-finances.aspx.
McKenna, B., “Get set for higher grocery bills,” The Globe and Mail February 26, 2013; http://www.theglobeandmail.com/report-on-business/economy/get-set-for-higher-grocery-bills/article9097136/.