Written by Michael Thervil
There are a lot of reasons why the cost of food keeps going up; people in America and the rest of the world are not only baffled by it but are outright starting to resent it. This year to date the cost of food has gone up 6.7% and is projected to rise at least anywhere from 3.7 to 6.1% in the near future. It was reported by the USDA (United States Department of Agriculture) that families across the U.S. on average are spending at least 10% of their earnings on food (eating in and dining out). However, experts in the financial industry are recommending that people in the U.S. Set aside anywhere from 10%-15% of their budget for groceries.
But even more than that, depending on where you live can and will affect how much you spend on groceries. For instance, people who live in Hawaii will spend significantly more on groceries than people that live in Alabama. One of the simplest reasons for this is logistics. For the year 2023, it is expected that the average cost of feeding 1 person whether they’re dining out or not is going to be between $2,400 to $4,000 this year. When the math is done it results in people spending at least $200 to $300 per month per person. So, for a family of three, it’s going to be anywhere from $600 to $900 per person ($1,000 if you round it up).
Americans and people around the world are feeling the pinch, and with Fed Rate Hikes going up at least another 5-basis point, that pitch that people are feeling across the world may start to feel like a financial grab on the arm for many people. So, what is keeping the cost of food so high? Well, the number one thing is the runaway inflation that’s happening in the United States and if you know anything about economics; whatever happens in the United States positive or negative, influences the rest of the world as well. On top of that the world is dealing with weather conditions that haven’t been seen in centuries. Farmers around the world are facing unprecedented drought conditions and flooding. Some are blaming global warming, and others are saying it is not global warming but it’s time itself that changes everything. Who or whatever you believe is totally up to you.
Furthermore, there’s the issue of global supply. Things like Commodity Pricing (CP) which affects the Consumer Pricing Index (CPI), and production delays due to labor and manpower shortages take a toll on how and when food items (and everything else) can be delivered. In addition to that, there are disruptions in logistics coupled with what is known as an “overreliance on a limited number of third parties''. The issue of overreliance on a limited number of third parties means that large retailers such as Walmart, Target, Sam's Club, and other large grocery chains are going to have to start diversifying their suppliers. Adding another blow to the ever-increasing amount of food pricing is the issue of disease within the agricultural industry. Some examples are Bird Flu, Swine Flu, Pathogenic Fungi, Nipah and New Castle Diseases all of which either affect crops and or livestock.
From the looks of it, it doesn't seem to be getting any better. Maybe this is the “new normal” as far as purchasing groceries are concerned. Who knows? Let us know what you think in the comments below.
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