The pandemic changed a lot in the food market and impacted consumer eating habits in major ways. When businesses shuttered and the supply chain left grocery store shelves bare, consumers rediscovered lost arts like baking fresh bread, canning, prepping and freezing meals, and buying local.
People stuck at home turned to cooking not only for food but entertainment. This change had a range of effects on the food market.
According to the USDA, at-home food prices rose 3.5% in 2020, outstripping dine-out prices, which rose just 3.4%. The following year, as restaurants reopened and pivoted to offer takeaway options through pick-up or delivery services, dine-out prices rose 4.5% while at-home food prices rose 3.5%.
With that being said, the outsized inflation of 2022 has had a pronounced impact on the food market, with prices reportedly up 8.3% between August 2021 and August 2022 and overall increases of 9-10% forecast for the year. With inflation affecting more than just food prices, how are households dealing with rising costs?
While 2022 saw a lot more businesses reopening, the first thing many families do when food costs get too high is revert to the savings of eating at home. This not only allows them to save on food costs but fuel as well.
While plenty of people have limited their visits to restaurants, they’re also cutting back on what they purchase at the grocery store.
Shopping for Essentials and Skipping Extras
Consumers report that rising costs at the market have led to targeted strategies when purchasing food. Some shoppers are going without extras they can no longer afford in order to focus on stretching their budget for essentials like eggs, milk, and more.
Some have turned to meal prep solutions, including big-batch cooking that can be frozen to create several meals, perhaps paired with a staple like rice to get the most from every serving.
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The Price of Meat
One of the categories that has seen the greatest increases over the past couple of years is meat. While some shoppers have given up on organic, grass-fed, or free-range options in favor of cheaper products, others are simply foregoing more expensive cuts or giving up on pricier meats like veal altogether.
Of all the food categories that saw increases in 2020, meat was by far the highest. Beef and veal saw a whopping 9.6% increase, while pork prices went up 6.3% and poultry increased by 5.6%. In 2021, beef and veal went up another 9.3%. For comparison, the cost of fresh vegetables went up only 1.1% in 2021.
The Growth of Buy Now, Pay Later Programs
One unintended consequence of the rising cost of consumer goods has been a boom in the use of “buy now, pay later” options for essential items like food. Companies and apps offering no-interest payment plans have become popular over the past several years for non-essential items like apparel, airline tickets, and more.
However, with the cost of consumer goods rising rapidly, more shoppers are using apps like Klarna and Afterpay to cover groceries, gas, and other essentials.
Some consumers find it easier to spread costs to a number of smaller payments over a couple of months, helping them to stay afloat from one paycheck to the next. Others use apps like Dosh that offer some cash back for restaurant and retail purchases.
Shopping at Discount Markets
One way some consumers are saving is by switching to discount or wholesale markets like Walmart and Costco for food purchases. Buying in bulk or choosing generic brands can make a big difference in a grocery bill when food costs are rising across the board.
Although price increases are expected to slow in 2023, with the USDA predicting overall inflation of just 2.5-3.5% in the food market, consumers dealing with high prices right now are finding creative ways to cut back and save in the meantime.
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