Food prices saw a burst of inflation over the past year, jumping 5.4 percent during the 12-month period that ended Oct. 31, according to the Bureau of Labor Statistics (BLS). But just as all politics is local, food prices are, too, and where you live plays a big part in how much you pay for supper. Want to know whether your food bill has jumped more than your friends'? The BLS has your answer.
In the West, for example, food prices gained 5.4 percent, while food in the Northeast rose 4.9 percent. Variations between the nation's largest metropolitan areas were even more extreme, ranging from a 9.1 percent gain in Seattle to a drop of 1.6 percent in Miami.
Why does a pound of hamburger cost more in San Francisco than in Boston? It’s complicated.
Food price increases in U.S. metro areas
|Metro area||12-month percent change|
|San Bernardino, California||4.6%|
Water, fuel and China
Start with water. Vast stretches of the West are in exceptional drought, according to the U.S. Department of Agriculture. In fact, 53.4 percent of the lower 48 states are in drought, up 11.9 percent in October, and 32 states are experiencing moderate drought or worse. Typically, in periods of drought, farmers switch to less-water-intensive crops — or crops that rely more on surface water than on groundwater. Not surprisingly, some West Coast areas, such as Seattle, San Francisco and Los Angeles, had the biggest increases in food prices.
California, for example, produces 25 percent of the nation’s food supply, but 80.4 percent of the state is in extreme drought (100 percent is in moderate drought or worse), and the state suffered one of its worst wildfire seasons ever. Farmers were able to produce large almond crops, because farmers tend to grow almond trees in areas with reliable groundwater. But prices for water-intensive food, such as meats and poultry, soared 13.6 percent in the San Francisco area.
In areas not affected by drought, increases in food prices were modest: In Atlanta, for example, food prices have risen a more reasonable 2.3 percent, and in Boston, prices actually fell 0.5 percent for the year. Why have Boston and Miami seen price declines the past 12 months? “I would chalk it up to the volatility of food prices,” says Alexandra Hall Bovee, regional commissioner for the BLS, in an email interview. “Another factor may be how much higher prices surged in the Boston/Cambridge/Newton area in 2020. Miami/Ft. Lauderdale/W Palm Beach also had higher increases than most metro areas in 2020."
High energy prices also affect the cost of food. Energy prices have soared 30 percent nationally the past 12 months. Producing fertilizer requires large amounts of natural gas, and getting food from farm to table requires gasoline and diesel fuel.
Finally, there’s China, which has greatly increased its buying this year. Corn exports to China were 4 million metric tons in 2020; that number has grown to 20 million metric tons this year, up 400 percent. U.S. beef sales to China are also up 400 percent from a year ago, and more than 20 times higher than in 2019. All other things being equal, rising exports mean lower supplies at home, and higher prices.
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Burgers instead of steaks
Smart shoppers have long known to substitute low-priced items for high-priced ones, and to avoid the tricks grocers use to get you to spend more. Beef steaks, for example, are 24.2 percent more expensive than they were a year ago. But hamburger — still no bargain — has risen 13.4 percent nationally. Similarly, fresh whole chicken is up 6.8 percent, compared with 10.2 percent for fresh and frozen chicken parts.
And don’t forget to eat your vegetables. Fresh veggies have risen just 1.7 percent the past 12 months; frozen vegetables have fallen 0.3 percent in price.
And as much as food prices have risen, it’s still less expensive to eat at home than to eat out, where rising labor costs have increased the average cost of a meal. The bill for a full-service meal is up 5.9 percent, and limited-service fast food is up 7.1 percent.
John Waggoner covers all things financial for AARP, from budgeting and taxes to retirement planning and Social Security. Previously he was a reporter for Kiplinger's Personal Finance and USA Today and has written books on investing and the 2008 financial crisis. Waggoner's USA Today investing column ran in dozens of newspapers for 25 years.