Treasury Secretary Janet Yellen has dismissed any suggestion of price shocks at U.S. grocery stores, despite prices rising 25 percent in more than four years.
“Have you been to the grocery store lately?” Yahoo Finance senior reporter Jennifer Schonberger asked the Treasury secretary in a June interview.
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“Of course I do, I go every week,” Yellen replied.
“It’s a shock, isn’t it?” Schonberger asked, and Janet Yellen was heard muttering, “No,” as the Yahoo reporter continued: “When you look at transportation costs, they’ve come down, global food prices have come down, but food prices remain high.”
Here’s what the Treasury Secretary had to say about food price inflation as millions of Americans struggle to fund their weekly grocery bills and feed their families.
Food price inflation
Average food prices at home rose 1.1% in the 12 months through June and 0.1% from the previous month, according to the latest inflation data released by the Bureau of Labor Statistics.
Four of the six major grocery food group indexes rose during the month. Butter and margarine rose 2.4%, dairy and related products rose 0.6%, and meat, poultry, fish and eggs rose 0.2%.
Schonberger asked Yellen: “I know they [food prices] “Prices are not increasing at the rate of last year, but they are still up 20% compared to the pre-COVID period.”
According to FRED Economic Data, average U.S. food prices at home have increased 25.4% since January 2020 (before pandemic-related disruptions).
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The data is telling, and Yellen said it largely reflects the cost increases, particularly labor, that food distribution companies have experienced. “But it’s possible that margins will increase,” she added.
She assured her interviewer that supermarket executives were aware of the financial difficulties Americans were facing. She told Schonberger that she had met with a group of supermarket CEOs, including Target CEO Brian Cornell, before the interview.
“They explained and announced that they understood that households were struggling with costs, particularly food costs, and they undertook reductions on the price of bread, milk and diapers. [and] “We must welcome this measure, which is useful.”
The Treasury secretary does not see the need for additional government intervention to help lower food prices at this time. Asked whether Washington should invest more in agriculture to boost the nation’s food supply, she said she would be “reluctant to accept that we participate in farm subsidies.”
How to deal with rising costs
As the food inflation index continues to wreak havoc, you can manage your costs by replacing brand name foods and products with generic alternatives. Cooking your own food instead of buying prepared meals can also save you a few dollars.
When shopping for essentials, consider using a cash back credit card to earn rewards on your purchases, or use food coupons (from newspapers, flyers, online apps, etc.) to save money at the grocery store checkout.
You can also ease your financial struggles by sticking to a strict budget that breaks down your monthly income into necessities, wants, savings, and (if you’ve borrowed money through credit cards, student loans, car loans, etc.) debt payments.
A common school of thought — the 50/30/20 budget — suggests that you should spend about 50% of your monthly income on essential needs, 30% on wants, and 20% on savings.
When inflation is high, you may need to adjust your allowance to get by, and that’s okay. You can revisit your budget when your finances are healthier and perhaps start saving more to ensure your long-term financial security.
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This article is provided for informational purposes only and should not be construed as advice. It is provided without warranty of any kind.
