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October 28, 2021

Are grocery prices set to take off?

Over the past six decades, the amount of money a family spent on food has almost increased roughly five fold, from $1,130 to $5,347 annually.

During this same time frame, however, average family income has increased at a much more rapid pace, from $4,237 to $50,302.

These are a few of the interesting stats to be found in "Grocery Spending Habits,” an infographic from BillShrink looking at income, supermarket spending, and other household expenditures since the 1950s.

While most other household expenses have increased at roughly the same pace as income, the proportion most of us spent on food has dropped steadily. Once upon a time, food accounted for nearly 30 per cent of a household's expenses. Today though, the average family spends about 13 per cent of its money on food.

But that doesn’t mean the price of groceries is actually coming down – quite the contrary, in fact.

Although some individual players in the food sector are still cutting prices to satisfy recession-weary consumers, Statistics Canada’s Consumer Price Index shows the price of food bought at stores increased by 2.1 per cent compared with last September, on top of a 1.6 per cent jump the previous month.

And the worst may be yet to come. Economists say the stubbornly high unemployment rate is still casting a big shadow over food prices. Not only is it making shoppers more sensitive to prices, it’s helping to keep the lid on labour costs in many agricultural areas in the U.S.

The killer, of course, is that the price of healthy food is rising faster than other foods, according to a new University of Washington study.

Although all food prices rose sharply in recent years, the price of the healthiest food has risen the fastest, UW researchers report.

Nutrient-dense food costs rose by 30 per cent while costs of less healthy food, including candy and fatty foods, rose by 16 per cent during the same time.

Have you noticed a sharp increase in the price of groceries where you shop? What are you doing to combat rising costs?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...