High food prices are part of a ‘one-two punch’ for struggling Americans

Stephanie Asymkos
·Reporter
·5 min read

Buying nutritious food is getting costlier as hunger in the country remains at elevated levels during the pandemic.

“This one-two punch is occurring,” Marc Bellemare, professor of applied economics at the University of Minnesota, told Yahoo Money, “where a lot of people are losing their main source of livelihood and then, at the same time, food is getting more expensive.”

The consumer price index (CPI) for food increased by 0.4% in December 2020 from the previous month, with food prices ending the year 3.9% higher than 2019, according to recent data from the Department of Agriculture and the Bureau of Labor Statistics. The year-over-year jump outpaced the 20-year average of 2% and the increases seen in 2018 (0.4%) and 2019 (0.9%).

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Food in nearly every category increased in price in the U.S. with omnivore diets taking the biggest hit. The annual cost of meat, poultry, fish, and dairy increased on average between 4.4% and 9.6% year over year, while the price of fresh fruit dropped 0.8%, according to the USDA.

Food prices are poised to rise this year, too, according to CPI modeling, but the increases are expected to be more in line with historical averages. (Photo: Getty)
Food prices are poised to rise this year, too, according to CPI modeling, but the increases are expected to be more in line with historical averages. (Photo: Getty)

'Struggling to have the income'

That combines with more households facing hunger. Although food insecurity has tapered off since its December 2020 high, about 24 million households — 12.3 million households with children — still reported there was sometimes or often not enough to eat between January 20 and February 1, 2021, according to theCensus Household Pulse Survey. That was the highest level since mid- to late October.

Many of the households struggling with food insecurity used to have stable finances, Chris Barrett, a Cornell University economist, explained to Yahoo Money. Income losses brought on by the COVID-19 outbreak — rather than the climbing cost of food — is squarely to blame.

Read more: 'Money, Honestly' podcast: Battling food insecurity amid the pandemic

“If people weren't losing their jobs or having the number of hours that they work in a restaurant or the hours they work in a meatpacking plant reduced, they'd still be able to afford a healthy diet,” he said. “They're struggling to have the income, even to pay what they used to pay for a decent diet.”

'Increase in food prices is not going to make the difference'

Food prices are poised to rise this year, too, according to CPI modeling, but the increases are expected to be more in line with historical averages. Food-at-home prices are forecast to increase between 1% and 2%, while food-away-from-home prices are expected to increase between 2% and 3%.

Considering the average U.S. household spends $7,800 a year on food, a 1% to 2% bill increase translates to $78 to $166 more per year. Spread out over 12 months, the average increase will be manageable for U.S. households, said Barrett.

“If they were able to afford it before, an increase of 2% in food prices is not going to make the difference between a family that was food secure suddenly becoming food insecure,” Barrett said. “Very few people fall into that category.”

Volunteers load food into vehicles at the Meadowlands YMCA in East Rutherford, N.J., Tuesday, Dec. 15, 2020. The organization says it is giving away 200,000 meals per month to people with food insecurity at this location, more than doubled since the summer. (AP Photo/Ted Shaffrey)
Volunteers load food into vehicles at the Meadowlands YMCA in East Rutherford, N.J., Tuesday, Dec. 15, 2020. The organization says it is giving away 200,000 meals per month to people with food insecurity at this location, more than doubled since the summer. (AP Photo/Ted Shaffrey)

The real harm in the price hikes is on people who were barely able to afford a healthy diet before the pandemic.

“The risk of food price spikes is driving people into diets or undernutrition who don't need to be there,” Barrett said. “We've got to find ways to both temper demand growth and to accelerate supply growth.”

'It's the income and livelihood losses right now'

For those whose higher grocery bills will be a financial hardship, continued government relief and aid will come through the extension of Supplemental Nutrition Assistance Program (SNAP) benefits, and pandemic-era measures like P-EBT for parents whose children no longer receive free or reduced lunch services because of remote school to receive the cash equivalent of those meals.

Read more: Here's what's in Joe Biden's $1.9 trillion 'rescue plan' that could help your wallet

President Biden wants to give low-income individuals and families more money, too, as part of his $1.9 trillion economic relief proposal that would help the most vulnerable: the unemployed, financially unstable, and food insecure. Included in the bill is a third round of direct payments to qualifying Americans that would be up to $1,400 per person, an increase in the extra weekly unemployment benefits from $300 to $400 through September, and a 15% increase in SNAP benefits through September.

“Whether or not food prices had gone up, it's the income and livelihood losses right now that imperils people's food security,” Barrett said. “The faster we can get the disease under control, and get people back into the work that they used to do to take care of their families, the faster we restore widespread access to healthy diets.”

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Stephanie is a reporter for Yahoo Money and Cashay, a new personal finance website. Follow her on Twitter @SJAsymkos.

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