Inflation Keeps Rising: How Much More of Your Paycheck Will Go to Groceries?

Although inflation has tempered since its recent peak of over 9% in mid-2022, prices still continue to rise. One of the more noticeable areas of inflation has been food prices.

Between 2019-2023, food prices, as measured by the all-food Consumer Price Index (CPI), increased 25%, compared to the 19.2% inflation rate for the all-items CPI. And for just 2023, food-at-home prices — i.e. grocery costs — increased by 5% compared to 2022, according to the U.S. Department of Agriculture.

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The most recent inflation data shows a slower trend, but food-at-home prices still grew by 1.2% annually in January 2024. Digging deeper, you can find that some grocery items have had falling prices recently, which has helped bring down the average.

For example, egg prices fell by 28.6% year over year as of January 2024, but that’s only after prices more than doubled from 2022 to early 2023, peaking at nearly $5. Now, the average price of a dozen Grade A large eggs is $2.52, though that’s still roughly a dollar above the price at the start of the pandemic, based on Bureau of Labor Statistics (BLS) data reported by the St. Louis Fed.

Meanwhile, some categories experienced a larger uptick in January 2024, thus bringing the overall average up. For example, the beef and veal category grew by 7.7% year over year, finds the BLS. Fresh vegetables dropped by 0.9%, but frozen vegetable prices increased by 5.0%.

In other words, while your grocery spending might have recently increased by 1.2% on an average basis, much depends on what exactly you’re shopping for. Some shoppers might notice a several percentage-point increase, while others might notice some of their favorite items have dropped in price, though perhaps these still exceed pre-pandemic levels.

Altogether, these changes have made an impact on many shoppers’ behaviors.

“Inflation has affected people’s grocery shopping budgets. People are buying less and using less expensive items — such as buying store brands instead of name brands — to make up for the increased prices. They are also cutting back on other areas of their budget, such as entertainment, to compensate for the increased grocery store prices,” said Shavon Roman, personal finance expert at Heal Plan Invest.

Cutting back isn’t always easy, but if you want to stretch your dollar further at the grocery store, consider the following tips.

Meal Plan

Being proactive with meal planning can yield savings at the grocery store, as you can avoid impulse purchases and make larger, cost-effective dishes that keep you full throughout the week.

“Meal planning is the most impactful strategy for clients to rein in their grocery spending,” said Allison Sanka, accredited financial counselor (AFC) and financial coach at Journey Financial Wellness.

“If you shop to this plan, you will have all the ingredients on hand for the week, so there’s no excuse to order takeout or food delivery at the last minute. I’ve seen clients save hundreds of dollars per month implementing this strategy,” she added.

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You can even make meal planning a fun family activity, rather than a chore.

“I love involving the kids in family meal planning; each family member chooses a meal and day of the week, and can even make the list of ingredients to buy at the store. This is fun to do at dinner one night and results in engaging family conversation,” said Sanka.

Be Disloyal

While you might have certain brands that you love, inflationary periods can stress those relationships. Sometimes to save money you’re better off buying generic store-brand items, said Nia Adams, financial education instructor at Perspectives.

In her view, “brand loyalty is decreasing due to the rising costs.”

Retail executives agree. Half think that consumers will care more about price than loyalty in 2024, finds Deloitte. You might even lose loyalty to certain grocery stores or types of foods and instead go where the savings are.

Shoppers are “making adjustments like switching to discount stores and buying more of what’s needed and picking up less ‘just to have in the house’ items. They are more aware of the weekly sales and watching the final bill more compared to the number of bags,” said Adams.

Order Online for Pickup

Lastly, you may be able to stretch your dollar further by ordering groceries online for pickup if that’s an option in your area. While online ordering sometimes costs more on a per-item basis, you can gain more control over your spending, compared to throwing items in your grocery cart and hoping the numbers don’t keep climbing when you’re at the register.

If you know you only want to spend $100, for example, it can be easier to track everything online and remove items from your online cart if you go over. And it can help you stick to the essentials.

“The store I shop at makes it super simple to stick to a list while also taking advantage of sales and coupons. I sit down with my list, type in what I’m looking for, and the results show me what’s on sale and if there are any coupons available. It also lets me know before checkout if I’m eligible for coupons that haven’t been applied. I consistently save $20-30 a trip just with this feature,” said Natalie Graham, money and budget coach at Go From Broke, LLC.

Overall, even as grocery prices increase, there are ways to save money, without necessarily feeling deprived. With more intentionality, such as by meal planning, searching for discounts, and ordering online, you can find ways to offset inflation.

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This article originally appeared on GOBankingRates.com: Inflation Keeps Rising: How Much More of Your Paycheck Will Go to Groceries?

 

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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