Inflation in the US makes Americans buy less: which states have the highest food prices

New study shows Americans are buying less groceries at the grocery store as grocery prices rise, reports Axios.

Photo: IStock

We are at a turning point when it comes to grocery shopping. For a while, inflation basically changed what products consumers buy.

Americans are simply starting to buy less now, says Emily Mokin, a food and beverage analyst at Morning Consult who conducted the survey.

People are beginning to think about what they really need and what can wait.

This is the opposite of the "pantry loading" we saw in 2020. Now it's unloading the pantry. You buy less and work through what's left of the old stock.

Price changes for some food products:

• According to the latest consumer price index, the cost of eating increased by 13% compared to last year.
• Cereals and bakery products increased by 16,2%.
• Dairy products by 16,9%.
• Soft drinks by 12,9%.
• Fruits and vegetables by 10,4%
• Meat, poultry, fish and eggs by 9%.

Nearly a quarter of those polled by Morning Consult in September said they often shop less at the grocery store to save money, up from 15% in October 2021.

On the subject: Card or cash: what makes you spend more

This is especially worrisome for low-income shoppers. The percentage of shoppers who are worried that their food will run out before they have money has increased from 35% to 42%.

Some consumers will inevitably buy groceries on credit; not an ideal plan in a time of soaring interest rates.

There is no doubt that persistently high inflation is shrinking household budgets across the country.

However, depending on variables such as location and spending patterns, your personal inflation rate can be better or worse than the national average. CNBC. In September, prices were generally 8,2% higher than a year earlier, according to the Consumer Price Index (CPI).

“Once you get into a high-inflation environment, the difference in impact on people can be quite noticeable,” said Brian Bethune, an economist and professor at Boston College.

Take, for example, location. According to a study by personal finance website WalletHub, which used data from the Federal Bureau of Labor Statistics to compile its study, headline inflation rates are below average in some U.S. metropolitan areas.

The study shows that in Tampa, Florida, prices were 10,5% higher in September than a year earlier. And in Phoenix, the annual inflation rate in August was 13%.

US agglomerations with the highest inflation:

• Phoenix Mesa Scottsdale, Arizona

Inflation year on year: 13%

Inflation for the previous two months: 0.8%

• Atlanta-Sandy Springs-Roswell, Georgia

Inflation year on year: 11,7%
Inflation for the previous two months: 1,3%

• Miami-Fort Lauderdale-West Palm Beach, Florida

Inflation year on year: 10,7%
Inflation for the previous two months: 0,4%

• Tampa St. Petersburg-Clearwater, Florida

Inflation year on year: 10,5%
Inflation for the previous two months: 0,3%

• Baltimore-Columbia-Towson, MD

Inflation year on year: 10,2%
Inflation for the previous two months: 0,1%

In addition to where you live, the impact of inflation on your budget also depends on your personal expenses, which fall into different CPI spending categories such as transport, eating out, or medical care.

“You can have two people in the same city with very different spending habits,” said Douglas Boneparte, certified financial planner, president of Bone Fide Wealth in New York.

Rent and groceries cut the budget

According to a recent LendingTree survey, higher prices are taking a toll on households, with 32% of them paying bills late in the past six months.

Grocery prices are up 13% compared to September 2021. So-called core inflation, which excludes energy and food, rose 6,6%. Housing that includes rent also grew by 6,6% last year and is more than 40% of core inflation.

“Low- and middle-income households spend most of their income on basic necessities: housing, food, energy,” said Dawit Kebede, senior economist at the National Association of Credit Unions.

While inflation is a normal part of the economy, the current rate is way above the Federal Reserve's 2% target.

The country's central bank is expected to continue its campaign to lower inflation by raising interest rates. When the rate-setting committee meets in early November, it is expected to raise the so-called federal funds rate by 0,75 percentage points for the fourth consecutive time. This rate has a ripple effect and ultimately affects the interest rate you pay on credit cards and loans.

The general idea is that by making the cost of borrowing money more expensive, spending will go down and there will be less inflationary pressure due to lower consumer demand. This approach can also lead to job loss.

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“The next rate increase will cause more problems for low- and middle-income households, as they are among the first to be hit by rising unemployment,” Kebede said.

Right now, the labor market remains tight, with the unemployment rate at 3,5%. However, the economic downturn is expected to lead to job losses.

Experts say it's worth making sure you have a financial cushion (such as emergency savings) in case your income drops.

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