Americans say food prices are not rising as rapidly as the government reports and 31 percent of them say they have made little or no change in their shopping habits in response to inflation, said Purdue University. But expectations of food inflation are on the rise, according to the Consumer Food Insights survey.
“Apparently, consumers aren’t ‘feeling’ inflation as much as the official data suggests,” said Purdue economist Jayson Lusk. “This may be a result of the fact that consumers can adjust to higher prices in a variety of ways by, for example, substituting to lower price alternatives or shopping on sale or at discount retailers.”
Participants in the latest survey, conducted in late February, said food prices rose by 5.2 percent in the past 12 months. By comparison, the Consumer Price Index said food inflation was the highest in 41 years – 7.9 percent. Consumers told Purdue they expected food prices to rise by 4.4 percent in the year ahead. A month earlier, they said food inflation would be 4.2 percent in the coming 12 months.
When asked, “Have you changed your grocery shopping” after food price increases of 10 percent in the past two years, the most common response, by 31 percent of participants, was “little or no change.” One in four said they “sought out more sales and discounts,” with smaller numbers listing actions such as using coupons, switching to cheaper brands, shopping at cheaper stores or buying more staple foods, such as pasta. Ten percent said they “spent less on other goods to maintain consumption” of food. Respondents were allowed to choose up to three responses.
Consumers were more willing to cut back on non-essentials such as ice cream than buying fewer premium foods such as meat or fruit.
The U.S. inflation rate will near 10 percent this month because of surging gasoline prices, said Kiplinger, publisher of business forecasts and personal financial advice. “The inflation rate will remain high for the rest of the year, ending at 6.5 percent or so in December.”
The Federal Reserve’s Open Market Committee was expected to announce an increase in interest rates of one-quarter percentage point on Wednesday, with more increases to follow as the Fed tries to slow inflation, reported CNBC. The Russian invasion of Ukraine, which drove up petroleum and grain prices, will be a complicating factor.
Participants in the monthly Purdue survey said they were spending a bit more on food in February than in January. Outlays were up by 3.2 percent to an average $163.52 a week on groceries and restaurant or carryout food. However, the portion of Americans having trouble buying food held steady with hints of improvement.
The Consumer Food Insights report is available here.