Food Inflation During Last 48 Years

Americans love to complain about rising food prices; here are three reasons they should stop whining

by Mark Perry, Carpe Diem, American Enterprise Institute

It’s a favorite pastime in this country – Americans love to complain about rising food prices. Even when they aren’t. In fact, given all of the complaining you would never know that average food price inflation in recent years is actually the lowest in several generations. Below are three reasons that Americans should stop whining about food prices, and be a little more appreciative of how affordable food is in the US today, especially when compared to other countries, or when compared to previous decades in US history.


food2

Reason 1

First of all, food prices over the most recent 12 month period through July have risen by only 1.44% (see blue line in the chart above, CPI food data here), following 12-month increases of 1.38% in June, and 1.37% in May. Over the last 12 months starting last August, the annual food inflation rate has ranged between 1.37% and 2%, and averaged 1.6%.

Given the somewhat volatile history of food prices on a monthly basis, we can look at the average food inflation rate over a longer period of time to smooth out some of the volatility. The red line in the chart above shows the 48-month moving average of monthly food inflation rates. For the most recent 48-month period from August 2009 to July 2013, annual food inflation has averaged less than 2% (only 1.97%), and that’s been the case for the previous two months as well: 1.96% average annual food inflation for the 48 months through June, and 1.97% for the 48 months through May. As can be seen in the chart, there hasn’t been a period in more than 47 years, since early 1966, when the average food inflation over any 4-year period has been below 2%.

Bottom Line: Annual increases in food prices over the last four years have averaged less than 2%, which is the lowest average food inflation rate over a 48-month period in almost 50 years. Although it might seem like food prices have been rising faster recently than in the past due to either temporary increases in the prices of certain foods or because of short periods of price volatility, the average increase in food prices of less than 2% over the last four years is the lowest in several generations.

Reason 2

Next, let’s consider an international comparison of spending on food at home as a share of total consumer expenditures in 2012, based on data from the US Department of Agriculture for the 85 countries in the table below. As a share of total consumer expenditures per person last year, Americans spent the least amount on food consumed at home of the 85 countries analyzed by the government at only 6.6% ($2,273 was spent on average per person in the US for food at home out of $35,541 in total consumer spending last year per person). The average share of consumer spending for food at home was 22.8% for the 84 countries in the table below, and 33 countries spend one-quarter or more on food as a share to total spending, and 19 countries devote one-third or more of their spending on food. Consumers in many of the advanced economies of Europe and Asia (e.g. Norway, France, Japan, and Belgium) spend twice as much or more on food at home as a share of their total consumer expenditures as do American consumers.

Bottom Line: As a share of their total consumer expenditures, Americans were able to budget less of their spending on food prepared at home last year (6.6%) than consumers in any other country in the world (based on the USDA sample), who needed to devote an average of almost 23% of their annual consumer expenditures on food at home.

CountryShare of Spending on Food, 2012Spending on Food, Per PersonConsumer Spending per Person

1. U.S.
6.6% $2,273 $34,541
2. Singapore 7.3% $1,422 $19,398
3. U.K. 9.1% $2,214 $24,260
4. Canada 9.6% $2,679 $27,761
5. Austria 10.1% $2,617 $25,908
6. Ireland 10.1% $2,037 $20,093
7. Australia 10.2% $3,814 $37,492
8. Germany 10.9% $2,481 $22,762
9.Switzerland 11.0% $4,943 $44,899
10. Denmark 11.1% $3,036 $27,306
11.Netherlands 11.6% $2,388 $20,625
12. Finland 12.0% $3,001 $24,927
13. Qatar 12.1% $1,361 $11,199
14. Sweden 12.2% $3,193 $26,146
15. S. Korea 12.2% $1,468 $12,002
16. Norway 13.2% $4,885 $37,146
17. France 13.2% $3,037 $22,945
18. Czech Rep. 13.3% $1,279 $9,643
19. Hong Kong 13.4% $3,224 $24,060
20. Taiwan 13.5% $1,657 $12,247
21. Japan 13.8% $3,818 $27,761
22. Belgium 13.8% $3,075 $22,208
23. Bahrain 13.9% $1,422 $10,200
24. Spain 14.0% $2,483 $17,713
25. Italy 14.2% $2,892 $20,362
26. U.A.E. 14.3% $3,024 $21,206
27. N. Zealand 14.6% $3,284 $22,448
28. Slovenia 15.3% $2,125 $13,858
29. Brazil 15.9% $1,123 $7,063
30. Israel 15.9% $2,783 $17,491
31. Hungary 16.2% $1,127 $6,972
32. Chile 16.2% $1,546 $9,566
33. Greece 16.5% $2,740 $16,652
34. Portugal 16.5% $2,225 $13,473
35. Slovakia 16.8% $1,603 $9,556
36. Uruguay 18.3% $1,878 $10,272
37. Colombia 18.4% $872 $4,744
38. Kuwait 18.6% $1,352 $7,284
39. Venezuela 18.6% $1,378 $7,421
40. Latvia 18.8% $1,619 $8,612
41. S. Africa 19.4% $877 $4,524
42. Malaysia 19.5% $1,084 $5,557
43. Poland 19.6% $1,521 $7,773
44. Estonia 19.6% $1,753 $8,923
45. Argentina 20.9% $1,381 $6,595
46. Bulgaria 21.2% $999 $4,718
47. Ecuador 21.9% $771 $3,526
48. Turkey 22.2% $1,708 $7,705
49. Costa Rica 23.3% $1,577 $6,754
50Turkmenistan 23.5% $589 $2,503
51. Dom. Rep. 24.5% $1,272 $5,192
52. Mexico 24.9% $1,625 $6,518
53. India 25.2% $220 $871
54. Iran 25.5% $699 $2,744
55. Lithuania 25.7% $2,331 $9,067
56. S. Arabia 25.8% $1,607 $6,220
57. China 26.9% $577 $2,149
58. Romania 28.6% $1,382 $4,827
59. Bolivia 28.7% $450 $1,567
60. Uzbekistan 31.0% $281 $908
61. Croatia 31.4% $2,847 $9,078
62.Bosnia-Herz. 31.4% $1,275 $4,057
63. Russia 31.6% $2,120 $6,709
64. Thailand 32.0% $1,016 $3,177
65. Jordan 32.2% $1,205 $3,743
66. Indonesia 33.4% $655 $1,964
67. Macedonia 34.4% $1,247 $3,626
68. Kazakhstan 35.1% $1,925 $5,483
69. Tunisia 35.5% $943 $2,660
70. Vietnam 35.9% $345 $962
71. Belarus 36.1% $1,115 $3,091
72. Peru 36.5% $1,507 $4,126
73. Ukraine 37.0% $1,028 $2,779
74. Guatemala 37.9% $1,091 $2,878
75. Nigeria 39.5% $381 $966
76. Georgia 40.4% $1,076 $2,663
77. Morocco 40.5% $777 $1,921
78. Azerbaijan 42.7% $1,222 $2,862
79. Egypt 42.7% $1,030 $2,410
80. Philippines 42.8% $823 $1,925
81. Algeria 43.7% $764 $1,749
82. Kenya 44.8% $350 $782
83. Cameroon 45.9% $423 $921
84. Pakistan 47.7% $415 $871

Reason 3

The chart below shows spending on food at home as a share of total consumer expenditures in the US, on annual basis back to 2012, using data from the Bureau of Economic Analysis. Over time, as food has become more affordable in America, consumers have needed to budget a decreasing share of their spending to eat at home, and the chart shows the decline over time, which has decreased from a range of 15-20% in the 1930s, 1940s and 1950s (comparable to Eastern European and South American countries today), to a range of 12-15% in the 1960s and 1970s (comparable to many European and Asian countries today), to a range of 7-12% in the 1980s and 1990s, and then below 7% since 2000. During the period that some describe as the “golden era” of middle class prosperity and upward mobility, Americans spent more than 17% of their household budgets on food at home in each year of that decade, and as much as 18.5% in 1952 – almost three times the share spent on food today.

food1

Bottom Line: Average food inflation over the last 4-years in the US is the lowest in more than 47 years, Americans spend a smaller share of their household budget on food (at 6.6%) than consumers in any other country in the world, and that share of total US consumer expenditures spent on food has fallen consistently over time, and is now half of what it was in the 1970s and about one-third of what it was in the 1950s. Stop your whining.

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