Americans are adjusting their eating and shopping patterns following the largest increase in grocery prices in five decades. Food-at-home prices surged 9.9 percent in 2022, the steepest climb since 1979, according to USDA data.
An April CNBC-SurveyMonkey poll found more than half of Americans consider everyday life less affordable. Of those, 76 percent identified rising grocery prices as a primary cause, outpacing concerns about gasoline and transportation at 71 percent, healthcare at 37 percent and housing at 32 percent.
Jared Bernstein, a senior policy fellow at the Stanford Institute for Economic Policy, said consumers retain long memories about food shopping and understand their purchasing power has diminished.
David Ortega, a food economist at Michigan State University, said the personal nature of food — people must eat every week — provides a constant reminder of higher prices.
Double-digit price increases began with the pandemic and Russia's invasion of Ukraine, delivering a shock after decades of stable grocery costs. Post-COVID-19, the acceleration was especially sharp for meats and poultry, while an outbreak of highly pathogenic avian influenza drove egg and poultry prices higher.
Despite a slowdown in overall food price inflation since 2022, household perception of elevated costs persists. That disconnect between official data and lived experience keeps inflation expectations anchored at elevated levels — a direct complication for central bank efforts to guide long-term yields lower. When households anticipate enduring price pressures on essential goods, wage demands follow, spending patterns shift and inflation risks becoming self-reinforcing.
For bond markets, the read-through is duration risk. Persistent inflation expectations force investors to demand greater compensation for holding longer-dated debt, pushing yields higher and constraining the path for future rate reductions. If core inflation shows deceleration while food prices stay stubborn, the divergence creates varied performance across bond sectors and widens the gap between real and nominal yields.
