Consumers Responses to Food Inflation?
Food prices in February were up nearly 8 percent compared to the year prior. How have consumers responded? The Center for Food Demand Analysis and Sustainability at Purdue University recently tackled this question in its monthly report, Consumer Food Insights. Authored by Jayson Lusk and Sam Polzin, Consumer Food Insights is a monthly survey of more than 1,200 Americans across the country to track trends and changes in consumer food demand. The surveys cover many factors regarding food purchases like weekly spending, attributes consumers most value when purchasing food, and satisfaction with purchases.
Interestingly, the survey found consumers underestimate inflation in food prices. Respondents said food prices on average increased 5.2 percent when in reality prices have risen 7.9 percent. The authors speculate consumers might underestimate inflation because they can adjust in a variety of ways. For example, nearly 31 percent of respondents reported little or no changes to their shopping habits in response to inflation. But several respondents indicated they have sought ways to reduce their food costs through sales and discounts (24 percent), coupons (18 percent), or switching to cheaper brands (Figure 4). So, while consumers have adjusted their purchasing habits some, it doesn’t appear wholesale changes have been made. However, consumer purchases bear watching as changes in purchasing habits can have implications for Nebraska producers, particularly livestock producers.
Figure 4. Changes to Grocery Shopping in Response to Food Price Inflation