You’re Not Imagining It: Grocery Shopping Has Gotten A Lot More Expensive, And Here’s The Scary Reason Why

November 16, 2018

A weekly trip to the grocery store has become more of a budget burner than a decade ago. Prices of food items have skyrocketed since the beginning of the century. But this is just the natural economic shift, right? Those numbers will go down eventually…right? According to experts, these grocery store price spikes are here to stay, and the stats are making us nervous.

Over the past decade, the price of food has risen 26.8 percent, and continues to rise 2.6 percent each year on average. Although we’re not seeing price hikes as severe as we saw about ten years ago, the United States Department of Agriculture reports that both foods ordered in restaurants and foods bought at grocery stores are priced about 0.2 percent to 0.4 percent higher than in September of 2017.

The price of food is a symptom of underlying economic activities. For example, these numbers directly reflect an increase in oil prices. Oil is crucial for fertilization, harvesting, processing, and transporting crops around the world.

In October 2018, despite the Organization of the Petroleum Exporting Countries’ (OPEC) promise to not cut oil production, oil prices peaked at a four-year high of $81.20 per barrel after President Trump threatened to back out of oil agreements with Iran. The USDA predicts the continuing increased cost for oil will add constant pressure on food prices for the foreseeable future.

And it’s not just oil that impacts the price of our food — it’s also tax.

As we reported in July, President Trump’s decision to enact aluminum and steel tariffs (export taxes) on Canada, Mexico, and the European Union trickled down to the food industry. This caused suppliers, like Coca-Cola, to hike prices based on the increase cost of packaging and manufacturing materials (you’ve probably noticed your soda-drinking habit has gotten more expensive — and this is why).

The cost of food is also heavily impacted by climate change.

As greenhouse gasses lead to global temperature increases — and therefore greater evaporation and drier, less absorbent soil — we are and will continue to experience massive droughts, heavy floods, and huge wildfires, all of which are detrimental to crops.

As The Climate Change Reality Project reports, 40 percent of the world (that’s 1.3 billion people) rely on agriculture as their income. Not only does climate change affect the physical crops, it also affects the well-being of the farmers and their families. Food spikes will occur in more affluent areas, and food shortages will plague the rest. These facts are even scarier when we know that the world’s population will increase by 3.4 billion people by 2050, as Columbia University predicts.

You should also know about the production of corn.

The United States government also supports the production of corn to create biofuels like ethanol. In 2000, the U.S. used 6 percent of its corn crops for ethanol production. However, as of October 2015, the country now uses 40 percent of its corn for biofuel. This means corn is limited within food supply, but demand has not diminished.

With lesser acreage dedicated to corn production for food plus higher demand for biofuels as a reaction to increasing oil prices, the cost of corn (and therefore, other foods that contain corn) and other crops used for biofuel production has impacted food prices in the supermarket and within the global fuel market.

So…how exactly does this affect you? Let us explain.

A 2012 Forbes article explains that higher food prices at home usually means a stagnant or weaker U.S. economy. When Americans see bigger price tags, they’re seeing the result of another country’s economic growth. And although the U.S. economy slowly picks up the slack, we are prone to experiencing higher inflation than normal during that time.

In this situation, the Federal Reserve could take action and raise interest rates to disrupt inflation, thus causing the economy to flatline. Low economic growth, high unemployment rates, and staggering prices is colloquially called “stagflation” and last affected Americans in the 1970s.

The issue is that there’s no immediate resolution for food price hikes. Costs will stay on the incline here and abroad as long as the food industry remains reliant on global economies, climate change, inflation, and politics — which it always will.

Unfortunately, we’ll have to continue trudging uphill, emptying our pockets along the way.