Tag Archives: spending money

Shop Sustainable – spending money

jams-annarbor1This week we’re going to look at the money we spend on food, particularly at the rising cost of products and how much we spend. In short, while food prices have gone up each year, the proportion of our income we spend on food has decreased. So, over the years, we’re spending less of our money on food even though prices are rising. What does that mean?

Rising cost of food
According to the USDA Economic Research Service, the Consumer Price Index (CPI) for all food increased 5.4 percent in 2007. Food-at-home prices (food bought in stores and other retailers to eat at home) increased 5.7 percent, while food-away-from-home prices (restaurants and other eating establishments) rose 4.1 percent in 2007. (In 2008, the CPI for food increased 5.5 percent – the largest increase since 1990; food-at-home rose 6.4 percent while food-away-from-home increased 4.4 percent.)

In 2007, the following products increased in price:

Butter up 31%
Cheddar cheese up 65%
Nonfat dry milk up 117%
Broiler chickens up 17.5%
Beef, select, up 12.8%
Corn up 70%
*Wheat up 60%

Reasons for the increase in food prices include:

  • Ethanol. Corn prices rose 70 percent in 2007 due to demand for ethanol (a fuel made from corn). And because of the demand for corn, more was planted, meaning that less acreage was used for soybeans, wheat, oats and barley, so their prices increased between 5 and 35 percentWorld demand. As countries like China and India develop more of a middle class, demand for food increases, driving up the cost.

    Oil. As oil prices increase, the cost of producing and transporting food increases.

Other factors that contribute to rising food prices include poor harvests, bad weather and a weak U.S. dollar.

(From Market Watch, * from U.S. News & World Report)

This means that the food you regularly purchase costs more without you changing any purchasing or eating habits. For someone on a budget, this can have a big impact. The Financial Times reported in March that farmers will plant fewer acres of major crops in 2009 because of lower prices and higher costs for inputs like fertilizers, which will likely further increase food prices.

Food Expenditures
According to the USDA, in 2007 U.S. consumers spent 9.8 percent of their after tax income on food, a percent that has remained constant since 2005.

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