There are many reasons why grocery prices are still higher than four years ago and will remain that way.
High grocery prices are a frustration felt across our country. Take, for instance, the latest election exit poll results.
Inflation, which fell under the umbrella of the economy in exit polls, was a leading issue for voters in the 2024 presidential election, and for a good reason. 4 in 5 Americans live check to check. Rising prices are particularly painful when there’s not much wiggle room in your budget.
Anecdotally, women were persistently vocal with me about the high price of groceries. And that makes sense. Women are roughly 3x more likely to do the grocery shopping.
Inflation is commonly misunderstood. For instance, 1 in 3 Americans could not correctly answer the most basic inflation question asked in the nation’s most widely taken financial literacy assessment.
The question is just below. See how you do. The answer is at the end of the article.
Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After one year, with the money in this account, you would
be able to buy more than today.
be able to buy exactly the same as today.
only be able to buy less than today.
Inflation Explained
Imagine a piece of paper crumpled into a tight ball. Now, picture what that same ball of paper would look like if you tried to unflatten it.
It doesn't matter how hard you try; those wrinkles will always be there. They won't go away.
The tight ball of crumpled paper represents the spike in grocery prices we experienced just following Covid, and the flat piece of wrinkled paper represents the reality of the high grocery prices that remain years later. Just as the wrinkles remain, so do the higher prices.
Yes, inflation rates have returned to levels associated with a strong economy, but the pain of previously high inflation rates remains.
We experienced a once-in-a-lifetime pandemic that spurred a global inflation crisis. Just because our economy is booming right now doesn't mean you are wrong to continue to feel the economic pain of the pandemic.
Higher Grocery Prices Explained
The flattened piece of paper goes for higher grocery prices. Let’s address the specifics.
As shared in a recently posted USA Facts article, several factors have affected food prices:
Supply chain challenges, including those related to COVID-19 and global relations such as the war in Ukraine
Animal disease, such as the avian flu in 2022 which impacted egg and chicken prices
Extreme weather events which damage crops and affect animals
The USDA expects grocery store prices to increase 1.2% in 2024 compared to 2023. Although the federal government can take indirect action to help manage grocery prices, it does not have a direct say in controlling price increases.
How to Manage Higher Grocery Prices
If the economic experts are right, the policies and priorities of the new administration will lead to inflation spiking again.
Let’s all hope that’s not the case, but if it is, the following past posts can help you manage higher prices.
Quiz Answer
Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After one year, with the money in this account, would you be able to buy…
More than today
Exactly the same as today
Less than today [Correct Answer]
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