Why are groceries still so expensive?

Inflation has fallen, but steep grocery prices are still crushing many Americans

Inflation is falling faster than most economists expected, but steep food prices are still taking a large bite out of Americans' budgets.

Grocery prices have surged more than 21% since the start of 2021, outstripping the overall 18% pace of inflation during that same time period. And while the pace of price increases for food has slowed in recent months, the overall cost of many grocery store staples is still marching higher. Experts say that relief for consumers is unlikely to arrive anytime soon.

"Prices very rarely go back. There's disinflation, meaning the rate of increase slows down. But the way we dig ourselves out of this is that people make more money above the rate of inflation," Robert Frick, corporate economist at Navy Federal Credit Union, told FOX Business. "That's happening now, but it's not a quick solution. It's going to take two or three years before people feel real relief from the surge in inflation, especially with things like food."

Food has been one of the most acute inflation pain points for Americans. More than two-thirds of voters say that inflation has hit them the hardest through higher food prices, according to a survey published by Yahoo Finance/Ipsos in November 2023. That is more than 50 percentage points higher than any other category, including gasoline, transportation costs and housing expenses. 


A shopper is seen in a grocery store in Miami

A shopper makes their way through a grocery store on July 12, 2023, in Miami, Florida. ((Photo by Joe Raedle/Getty Images) / Getty Images)

Rising food prices are concerning because those higher costs affect just about every household in the country. The burden is disproportionately borne by low-income Americans, who spend about 30% of their income on food, according to data published by the USDA. 

"You kind of have this double whammy of food and transportation," Frick said. "People say, ‘Oh, well you know the rate of inflation is going down. What’s everybody complaining about?' Well, the rate of inflation is going down, but the weight of inflation continues to increase. If you're already under these outsized burdens because you're lower income, just a little bit more hurts."

Stubbornly high grocery prices are weighing on voters across the country and calling into question President Biden's claim that the economy is booming. Biden – whose approval rating has taken a hit as consumers grapple with high inflation – has responded by accusing grocery stores of ripping off their customers with high pricing while simultaneously reducing the package size and portions of foods.


In January, the cost of groceries increased for the 10th straight month. Grocery prices climbed 0.4% over the course of the month, faster than the overall 0.3% increase in inflation, according to the data. On an annual basis, food prices remain up 1.2% compared with the same time last year.

Food prices are rising for several reasons, including ongoing supply chain issues, the smallest cattle inventory in 73 years, an Avian flu outbreak that affected poultry supply and sent the cost of chicken and eggs skyrocketing, and a worldwide grain deficit that is the result of the prolonged conflict in Ukraine. Wages for food service workers in grocery stores, warehouses and processing plants have also increased, meaning many of those businesses are passing that cost along to the consumer.

Although some of these problems are finally clearing up, consumers looking for immediate relief may be disappointed. Federal Reserve Chair Jerome Powell said during an interview with "60 Minutes" that aired at the beginning of February that high prices could be here to stay unless there is a severe recession.

Grocery store prices

Prices are displayed in a grocery store on Feb. 1, 2023, in New York City. ((Photo by Leonardo Munoz/VIEWpress) / Getty Images)

"The prices of some things will decline. Others will go up. But we don't expect to see a decline in the overall price level. That doesn't tend to happen in economies, except in very negative circumstances," Powell said. "If you think about the basic necessities, things like bread and milk and eggs and meats of various kinds, if you look back, prices are substantially higher than they were before the pandemic."


While inflation has fallen considerably from a peak of 9.1% notched during June 2022, it remains above the Federal Reserve's 2% goal. And when compared with January 2021, shortly before the inflation crisis began, prices are up a stunning 17.6%.

The typical U.S. household needed to pay $211 more a month in December to purchase the same goods and services it did one year ago because of still-high inflation, according to new calculations from Moody's Analytics. Americans are paying on average $1,020 more each month compared with the same time two years ago.