|Issue of the Day: Spending on Farm Foods Slows|
Published Thursday, February 19th, 2009
According to the Commerce Department’s Bureau of Economic Analysis, consumer spending on food fell an inflation-adjusted 3.7% from the third quarter of 2008. This is the steepest decline in 62 years of analysis based on receipts from a variety of food-oriented businesses across the country. Consumers are trading down from specialty foods to lower priced items, rooting through pantries for staples, and forgoing restaurants; all are adding to the decline. According to the Private label Manufactures Association, the U.S. sales of private-label food rose 10% in 2008 from 2007; concurrently, branded food products saw sales rise 2.8%.
Also on the rise is the use of fast food restaurants, who absorbed much of the higher ingredient costs to keep much of its menu items near $1. With prices for supermarket food surging higher, the fast food industry has made its products more of a bargain than before, attracting ever more people to their table. For example, McDonald’s has reported that same-store sales rose 7.1% in January, 5.4% in the U.S. Both the increase in fast food and the decrease in consumer spending for food are contributing to the percentage of food expenditures spent on farm foods (fruits, vegtables, grains and meats) to slow down its steady increase from 1% change to mere 0.01% to 0.02% per year starting in 2000.