I Keep My Grocery Receipts

How much have food prices really increased?

I almost always get a paper receipt from the grocery store. I bring it home and stuff it in an envelope, where it stays for a few years before getting thrown out.  

Last week, I found a receipt from December 2019, which provides a perfect way to assess how prices have changed for the foods I buy. Have the prices of things I buy changed by the amount government data says they have?

On Sunday, I walked around my local store and noted the price of as many of the items on this receipt as I could. I couldn't price everything, e.g., in 2019, I paid $14.74 for London Broil but the receipt doesn't say how many pounds I bought. 

I was able to find current prices for most of the items on my old receipt.  Those items cost $139.42 four years ago and would cost $175.64 today.  This is an increase of 26%.

Over the same period, the consumer price index (CPI) increased by 18%. The CPI is the most common measure of inflation in the economy.

Most of my grocery items increased by more than the CPI. Some items were on sale in 2019 (diced tomatoes, spaghetti), whereas others were on sale in 2023 (kidney beans, cornbread mix). Eggs were up 157%, partly because eggs sold in California are now required to be produced cage free and partly because the avian flu has returned, although not nearly as badly as last year. 

The Bureau of Labor Statistics reports CPI for numerous baskets of goods and services. It reports that the CPI for food at home (aka groceries) is up 25% since December 2019, which is more than the 18% for the all items CPI, but almost the same as the 26% increase in my grocery bill. 

I couldn't find any paper receipts from prior to December 2019, but I found some receipts from online orders we made at safeway.com in 2007 and in 2017.  I compared prices from those orders (two orders in early 2007 and three orders in early 2017) to current prices on safeway.com.  My 2007 orders would cost 57% more today, which is almost identical to the increase in the CPI for food at home. My 2017 orders would cost 23% more today, which is a slightly smaller increase than indicated in the CPI.

One reason we are more conscious of increase in the price of food than other goods is that we buy food often and in an environment where we can see and compare prices. But, here's another theory about why people may sometimes notice big jumps in food prices: a lot of items are priced at $X.49 or $X.99.

Prices don't tend to inch up by a certain percentage each month. Instead, one week baked beans are $2.99 and the next week they are $3.99. You notice that change, whereas you may not have noticed incremental changes if they had happened every week. 

So, what will happen next?

In the long term, food prices follow non-food prices. In 2007-08, food prices inflated faster than non-food prices. Then they grew more slowly over the next decade until they were back on par in 2019. Food prices may fall somewhat in 2024, like in 2009 or 2017, but mostly they will tend to grow more slowly than other prices for the next few years.

Non-food prices will not come down. The price level in an economy only decreases when demand dries up and it falls into a deep recession. In a healthy economy, wages will increase to catch up with prices after an inflationary episode. Wages are already increasing in the US, especially for low-income workers, whose wages have increased by more than the rate of inflation on average.

So, you can put away your tin foil hat. The government consumer price inflation data matches what has happened in my grocery store. 

Resources

1. Spreadsheet with my food purchase data

2. R code to generate the graphs

3. Ag Data News article from 2022:  Agricultural Prices Aren't Driving Food Price Inflation