Consumers Grapple with Persistent Food Price Perceptions

Despite a slowdown in food inflation, US consumers continue to view current food prices as unpalatable, according to new research from the Purdue University College of Agriculture's Center for Food Demand Analysis and Sustainability (CFDAS). The Purdue CFDAS May 2024 Consumer Food Insights (CFI) survey reveals that consumers' perceptions of food price changes do not align with actual inflation data, highlighting the lingering impact of previous years' dramatic price increases.

Consumers Remain Skeptical of Easing Food Costs

Diverging Perceptions and Inflation Data

The survey findings indicate that 56% of more than 1,200 US shoppers believe food prices have risen the most over the past 12 months compared to other common household expenses. In contrast, official inflation data paints a different picture, with the May 2024 Consumer Price Index showing a year-over-year food price increase of just 2.1%, significantly lower than the price hikes observed in other sectors like vehicle insurance (20.3%) and utilities (4.7%).

Persistent Inflation Estimates

The disconnect between consumer perceptions and actual inflation data is further highlighted by the survey results. A staggering 84% of respondents said food prices "increased a lot" (51%) or "increased a little" (33%) over the past 12 months, outpacing the percentage of consumers who reported price increases in other areas like household items/supplies (76%), transportation (71%), and utilities (70%).Moreover, consumers in the Purdue CFDAS poll estimated food-at-home inflation at 6.2% during the past 12 months and expect it to decline to 3.6% over the next 12 months, significantly higher than the CPI's 2.1% figure for May 2024. This suggests that the dramatic food price increases experienced in previous years continue to shape consumer sentiment, even as the rate of inflation has slowed.

Generational Differences in Coping Strategies

The survey also revealed generational differences in how consumers are coping with higher food prices. Around 37% of Gen Z and Millennial consumers reported drawing on savings or going into debt to finance their food purchases over the past year, compared to just 28% of Gen X and 13% of Boomer-plus consumers. This highlights the financial strain younger adults are facing in affording food, a concerning trend that warrants further attention.

Adapting to Higher Costs

To mitigate the impact of rising food prices, consumers have employed a range of strategies, with the most common being searching for more sales and discounts (27%). Other tactics include buying fewer non-essential foods (20%), switching to less expensive or generic brands (20% and 19%, respectively), using more coupons (17%), and shopping at stores with lower pricing (16%).These adaptations have had a tangible impact on consumer spending patterns. While weekly household expenditures for food at home have increased from $123 in July 2023 to $131 in May 2024, the average weekly spending on food away from home has declined from $69 to $66 during the same period. This suggests that consumers are prioritizing cost-saving measures when it comes to their food purchases.

Prioritizing Taste and Affordability

Despite the financial pressures, consumers continue to place a high value on the taste and affordability of their food purchases, ranking these factors as the top considerations in their purchasing decisions. Nutrition and availability also play a significant role, underscoring the multifaceted nature of consumer preferences in the current economic climate.