Four Common Misconceptions About Food Prices

By: Andy Harig, Vice President, Tax, Trade, Sustainability & Policy Development, FMI

Is there any more beloved topic for water cooler conversations than complaining about the cost of food? Accordingly, food prices are often in the news, especially when factors such as soaring commodity prices have the potential to increase our weekly or monthly grocery bill. A number of misconceptions regarding grocery prices regularly permeate both the news and our water cooler conversations. These are due to a combination of outdated ideas that should have been put to rest long ago and high profile “examples” that are not representative of how the industry as a whole operates on a daily basis. 

Clearing up these misconceptions may help shoppers make more informed choices in the supermarket, save money, and improve their diets. I spoke with Ricky Volpe, Ph.D. associate professor at Cal Poly and author of The Fundamentals of Food Prices: Costs, Consumer Demand, and COVID-19, a new report release by FMI, and he shared the following four most common misconceptions related to food prices, paired with the reality and evidence that runs counter to these ideas.

Misconception #1. Food prices are at record highs

Headlines often proclaim that grocery prices have reached record highs. This may be technically true, if you don’t build in for inflation and the changing value of the U.S. dollar. But taking inflation into account, many prices in the supermarket are flat or even trending down over time. Since 2000, grape prices are down 42%, strawberry prices are down 33%, milk prices are down 20%, and egg prices are down 11%. Increased global imports and improvements in production, harvesting, processing, and storage practices have all contributed to these price declines in the U.S.

Misconception #2. Healthy food is more expensive

Eating healthy can be expensive in America, but it doesn’t have to be. An influential USDA study in 2012 showed that unhealthy foods are cheaper per calorie, but healthy foods are cheaper both by weight and by serving. Admittedly, categorizing foods as “healthy” or “unhealthy” can be tricky business, but a key takeaway from the study is that households on even the tightest budgets can afford to meet the Dietary Guidelines for Americans by purchasing fruits, vegetables, whole grains, and lean sources of protein. Eating healthy doesn’t necessarily mean buying organic kale!

Misconception #3. Private brands are cheaper because they’re lower quality

Private brands, or store brands, were once comparable to generics and were of lower quality than competing national brands. But private brands have emerged as one of the most important ways that retailers can differentiate themselves and establish depth to their product lines. Survey after survey shows that consumers find private brands today to be as good (if not better!) than leading national brands. They remain lower priced, however, due to lower marketing, advertising, packaging, and transportation costs.

Misconception #4. Foods are always at their most expensive when demand is the highest

Retailers have long recognized that offering low prices on highly visible products is a great way to get customers in the door. To see evidence of this, consumers just need to pay attention to their stores’ offerings over the next several weeks. On average, turkey prices are at their lowest point all year in the weeks leading up to Thanksgiving! There are plenty of other examples of foods, such as summertime staples for the grill, and baking items during the holiday season, that have the lowest prices and most deals during their seasons of peak demand.

FMI has developed an interactive web experience that helps visitors better understand how food prices are determined and how the COVID-19 shock to the supply chain affected food prices. Visit FMI.org/FoodPrices for more details and resources.

FMI.org/FoodPrices