Grocery prices are down from their summer peaks — here’s why food bills are still stubbornly high
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.
Rosol, a resident of the Chicago suburb Westmont, Ill., who lost her job as a substitute teacher when COVID-19 shut schools in March, could afford it thanks to the extra $600 per 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 eggs 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.
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.”
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.
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.