Why are you paying more for food?
A study by the consumer group FairPrice found that shoppers are paying a premium of 15% to 25% for foods in the US, which includes items like pasta and cheese, over the past year.
The study found that the average price for those items increased by a whopping 25% over the previous year, with some items, like pasta, going up to $2.00 a pound.
“Americans have been spending more and more on food this year, which is putting pressure on prices,” said the report’s author, Melissa Smegielski.
“That’s putting pressure not only on the grocery store, but also on the fast food and restaurant industry.”
A recent survey from market research firm eMarketer found that average retail prices in the United States rose 6% last year, and they’re set to keep rising.
The consumer group also found that American consumers spent $3.4 trillion on groceries in 2015, which they spent on average on food items such as meat, vegetables and bread.
The survey found that grocery spending in the U.S. has been on a steady upward trajectory for years, and that the majority of the growth has been concentrated in the food sector.
“The growth in food spending in 2015 was driven by the expansion of grocery stores, but there’s also been growth in other food-related products, like restaurants and grocery stores,” said Michael Peevey, the group’s senior vice president of consumer research.
“Food companies are trying to stay competitive in a changing marketplace, but it’s important to remember that it’s not the whole of the industry.”
The report noted that “the food industry has seen record levels of profit over the last five years,” with the average grocery store owner earning $1.27 million in 2015.
“It’s also important to recognize that a lot of food costs are driven by supply and demand,” Smegieski said.
“If you want to be able to buy a lot more food, you’re going to have to spend a lot less.”
She added that “there’s still plenty of room for growth” in the industry.
The biggest growth in the past decade has been in the price of fresh fruits and vegetables.
According to the report, consumers are spending an average of $7.26 per gallon of fresh produce, which has been climbing faster than inflation.
“We’ve been seeing this in the fruit and vegetable market,” said Elizabeth Burchard, a spokeswoman for the American Horticultural Association.
“Consumers have become increasingly conscious about how they use and eat their fruits and veggies, and it’s really important to have more choice and options to ensure they’re getting the freshest and most nutritious food available.”
Smegski added that the “price gap” between what shoppers can afford and what they actually spend has been “growing in both volume and intensity” in recent years.
“People are actually paying more,” she said.
The group’s study found the food price gap has been rising faster than wages over the years, with the wage premium for food items, which include meat, cheese and meat-related ingredients, rising by 6.4% in 2015 and 6.3% in 2014.
The median weekly wage for food service workers has also increased since 2014, from $12.76 per hour to $14.80.
“This means that the pay gap between the typical household and the workers in the labor force has been growing,” Smedielski said, adding that “this wage premium has pushed the cost of food into the household budget, and this is a huge drag on wages.”
The average wage for fast food workers has been flat since 2014.
“With the fast-food industry continuing to grow, it’s no surprise that workers in fast-casual restaurants are having to contend with higher wages and fewer hours,” said Matthew Kwan, president of the National Restaurant Association.
But the industry is also growing more rapidly than the rest of the U, with restaurants employing a record 9.3 million people in 2015 compared to just over 2 million people the year before.
The fast food industry employs over 13 million people, with more than a quarter of those workers making more than $25,000 per year, according to a 2016 study by Bloomberg.
The restaurant industry, which employs more than 20 million people and accounts for $10 trillion in annual revenue, is expected to add more than 5 million jobs by 2020, according the Bloomberg report.
“Farming, fishing, and other industries have always been impacted by rising food costs, and the rising costs of food is the result of a growing economy,” Kwan said.
However, he noted that a growing number of companies are beginning to move away from high-priced fast food.
“These are new companies, and these companies are going to be growing more quickly than the industry as a whole,” he said.