TEXAS, USA — Americans are eating up their income! A new report from the USDA shows Americans are spending over 11% of their disposable income on food. That's the most in 30 years.
The big question is why inflation has hit groceries so hard and whether is there an end in sight to these rising prices.
The Consumer Price Index signaled that inflation is cooling.
"Consumer Price Index is a measure of overall prices, what a consumer spends on a typical market basket and that's calculated in cities around the country," said Ray Perryman of the economic and financial analysis firm the Perryman Group.
Even though inflation may be cooling, Perryman said that doesn't mean prices are going down, at least not yet.
"The USDA measure is purely based on the cost of food and so consequently, you get a little bit different measure from that when it's more exclusively focused just on the food sector," Perryman added. "We haven't had an inflation like this in a number of years. Inflation means a general rise in prices. When it stabilizes, that doesn't mean prices fall. It simply means they don't keep rising at the same rate. The prices will go up less than our incomes go up. Over time, we'll be spending a smaller percentage of our income on food."
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Spending more on groceries became a reality for Central Texas shopper Tarrodd Collier when he bought ingredients to make a pizza for himself and his wife.
"I was like, 'It shouldn't be too expensive to, you know, go get tomato sauce, pepperoni, a little pita bread or something like that,'" Collier said. "Then sure enough, I went to HEB, come out with those ingredients and I just checked out and I was like, whoa $38. I was like, 'I could have went to Papa John's, Pizza Hut or anything for this.'"
Collier said looking at the receipt was a shock.
"It's just kind of one of those deals like 'What's causing this?'" Collier added. "How expensive is it actually going to get right now? It's at an all-time high."
Because food prices are commodities and swing over time, there's no telling when high prices will go away.
Prices vary based on weather, growing seasons and international trade.
"It's a complex issue," Perryman said.
Perryman says the situation will improve if incomes outpace inflation.
"Incomes are growing faster than prices," Perryman said. "So consequently, people are actually gaining purchasing power and that's a positive thing. It takes a while for people to realize it."
Perryman says the Central Texas economy is actually doing quite well. All the cities along I-35 have been growing at a rapid rate while far exceeding the state and national average.
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