Perplexing price points
Grocery costs are down from their summer peaks. But why are your bills still stubbornly high?
“You walk around the store and say, ‘Do I get this or do I get that? How much of this can I get to make it stretch?’” — YverniaWilson, 63, Calumet Heights resident
Eva Rosol was stunned during the summer when a rotisserie chicken that she could normally find on sale for $6 suddenly set her back $15.
The Westmont woman, who lost her job as a substitute teacher when COVID-19 shut schools in March, could afford it thanks to the extra $600per week in unemployment benefits the federal government offered during the first four months of the pandemic. But those extra benefits expired in late July.
Now Rosol, 54, who has a business degree and is seeking a job in sales, receives $108 weekly in unemployment aid. Meanwhile, her husband, who sells advertising for an auto and RV magazine, is making a quarter of what he normally earns.
Rosol has nixed the one night a week they used to eat out, shops the circulars and frequents five different grocery stores to find the lowest prices, trying not to rely on charity to put food on the table.
“I have gone to food pantries, but I feel guilty doing that because there are other people who have much more need,” she said.
Though food prices that spiked during the summer have started to come down, staples like milk and meat remain much pricier than usual, pinching the budgets of millions of Americans who can ill afford higher grocery bills.
The price Chicago-area shoppers paid for dairy products like milk, butter and cheese was 8.3% higher in September than a year before, according to the Labor Department’ s Bureau of Labor Statistics. Meat prices were 5.3% higher. Normal annual food inflation is 2% to 3%.
Prices have fallen from summer peaks — meat prices in the Chicago metro area were 15.3% higher in June compared with last year — but with fewer promotions, grocery bills are still higher.
Usually, 31.4% of grocery store items are purchased on some sort of sale, but at the end of September the share was 26%, according to market research firm Nielsen. The biggest impact was in the household care department, where just 15% of items were sold on promotion, half the usual amount. Heightened consumer demand and strained supply are giving stores little reason to mark down prices, Nielsen said.
Elevated food prices may be going unnoticed by families who are saving money during the pandemic because of canceled vacations and skipped commutes.
But they squeeze the many who remain out of
work or face new rounds of layoffs amid a second surge of COVID-19, while Congress remains at an impasse over further relief.
Illinois’ unemployment rate ticked downto 10.2% in September — higher than the 7.9% national average — but more than 650,000 Illinoisans remain unemployed, up from 240,000 this time last year. Thousands more have seen their hours or pay reduced or aren’t included in the unemployment numbers because they’ve stopped looking forwork.
There were 47,018 new unemployment claims filed in Illinois during the week ended Oct. 17, a 30% jump from twoweeks earlier.
Without the $600 bonus, people relying on unemployment aid are receiving just 40% of their usual pay. A $300-per-week boost ordered by President Donald Trump using disaster relief funds covered lost wages only through early September. Negotiations on legislation to extend the extra unemployment benefits and provide more stimulus checks are inching forward.
“That extramoney kept a huge number of families afloat during the summer,” said Jeremy Rosen, director of economic justice at the Shriver Center on Poverty Law.
Food makes up about 20% of the average family budget. Though food prices tend to be volatile, the current environment “adds to the perfect storm of so many people losing their jobs and losing income,” said Northwestern University economist Diane Schanzenbach.
During August and September, 22% of Chicagoans, and 30% of those with kids, reported being food insecure, which means they can’t afford enough food for a healthy life, Schanzenbach said. During normal times, just 10% fall into that category.
People facing the pressure of higher prices are changing what they buy to stretch their food dollars.
Ariel Neal, owner of Leira Knows Cocktails and Events, has been opting for more potatoes and starches and fewer fruits and vegetables.
Neal, 42, who designs corporate and social events featuring cocktail and spirits education, lost much of her business when the pandemic took hold. She didn’t qualify for unemployment benefits or small business relief, and has been subsisting on her savings and the government’s Supplemental Nutrition Assistance Program, formerly known as food stamps.
“Before, $20 would have gotten me at least two to three meals,” said Neal, 42, who lives in Calumet City. “Twenty dollars doesn’t do that anymore.”
How grocery prices got so high
Food prices started to soar early in the pandemic, as pantry-loading shoppers cleared grocery shelves and government stay-at-home mandates took hold in mid-March. Prices for food eaten at home in the Chicago area jumped 3.2% from March to April, the largest monthly increase since the 1970s, driven by hikes in cereal, dairy, meat and nonalcoholic beverages.
The sticker shock caused complaints of price gouging to pour into the city’s Department of Business Affairs and Consumer Protection, which at the end of March and beginning of April was receiving 100 complaints per week. Price gouging complaints have totaled 748 this year, compared with two during all of 2019. The agency determined that in the vast majority of cases the price hikes were reasonable due to increased demand or decreased supply, said spokesman Isaac Reichman. It has issued citations to just four businesses.
Supply chain bottlenecks exacerbated the price increases for meat, eggs and dairy.
Outbreaks of COVID-19 among workers at pork and beef processing plants led to temporary plant shutdowns in April and May that left farmers unable to send their animals to slaughter while retailers and butchers couldn’t get their hands on enough cuts of meat.
The sudden mass shift to eating at home, which in March jumped to 60% of consumers’ food dollars, up from 48% in February — and remains elevated at 54% — created numerous hurdles as processors struggled to repackage food for consumers rather than commercial clients.
Egg prices surged until the Food and Drug Administration issued temporary food safety standard exemptions that allowed eggs destined for schools and restaurants to be sold at retail.
Dairy prices plunged, then skyrocketed, as farmers facing a surplus dumped milk, curtailed milking schedules and in some cases culled their herds to reduce supply, while the government stepped in and purchased surplus product from farmers.
“That put retail in a whipsaw,” said Peter Vitaliano, chief economist at the National Milk Producers Federation.
It took a few months for the volatility to show up in grocery prices because retailers like to keep prices stable, Vitaliano said.
Most of the problems have been worked through, experts say. Transmission of the virus at meat plants is under control and beef and pork processing volumes are now greater than last year, said Jayson Lusk, head of the Department of Agricultural Economics at Purdue University.
But even as price pressures start to come down, “the supply chain bottleneck is still there” and “we are still seeing it in some of the price data,” Lusk said.
Economists expect food prices to normalize.
The U.S. Department of Agriculture is forecasting food prices to be up 2% to 3% for this year and next, which is slightly higher than the 1.9% increase last year but in line with the 20-year historical average of 2.3%, said Scott Irwin, a professor in the department agriculture and consumer economics at the University of Illinois at Urbana-Champaign.
Overall, consumer prices in the Chicago area have grown at a modest annual rate of 1%, with higher food prices offset by lower apparel and gas prices.
Still, the year’s food price tumult revealed some interesting sociological lessons, Irwin said. At the peak of panic, ground beef became one of the hottest commodities.
“It seemed that the one food item people really wanted to stock upon when they were scared the most was hamburger,” he said.
‘It’s expensive to eat healthy’
Yvernia Wilson, who is on a fixed income and vigilant about grocery prices, was taken aback early in the summer when a large package of hamburger meat she’d normally pay $8.99 for was listed at $14 at the Jewel-Osco she shops at on the South Side.
A nice-sized pot roast for Sunday dinner was almost $20, $6 more than she’d usually spend. Even a package of chicken wings cost $3 more.
Months later, prices still feel “outrageous,” said Wilson, 63, who lives in Calumet Heights with her adult son and 6-year-old twin granddaughters and pays for the household’s groceries.
“You walk around the store and say, ‘Do I get this or do I get that? How much of this can I get to make it stretch?’” she said.
Wilson restricts herself to two meats and for some items has resorted to buying cheaper brands she doesn’t necessarily like. She bypasses the organic aisle and sometimes forgoes fruit altogether if it isn’t on sale.
“We talk about eating healthy, and it’s expensive to eat healthy,” she said.
Wilson, who lost her husband to cancer in December, lives off Social Security and a small pension from the insurance company where she worked for 26 years.
Wilson also, for the first time in her life, applied for government food assistance — a notion that took some time to accept.
“I alway sworked. At 63, I said, ‘Is this what my life has come to now?’” said Wilson, who is enrolled at Chicago State University, pursuing her bachelor’s degree in sociology. “After the death of my husband I have calmed down a lotmore and I have seen the gratefulness in it.”