Fighting Inflation at the Grocery Store

If you’ve been feeling the pinch at the grocery store, you’re not alone. Groceries are one of life’s required expenditures, and if you don’t purchase them, you don’t eat. If you don’t eat, well … you know what happens.

But with a looming recession and record inflation over the past year, it’s getting harder to fill that grocery cart on a budget.

Introduction

The Bureau of Labor Statistics (BLS) reported in early 2023 that inflation was letting up, and price increases for fresh meat and produce slowed in the previous few months. But payment processor PYMNTS conducted research showing that consumers don’t agree.

As measured by the BLS Consumer Price Index (CPI), overall inflation is currently around 7%, which is back down to where it stood in late 2021 after spiking to over 9% in the summer of 2022. Still, PYMNTS found that consumers are cutting back in a variety of ways, trying to stay ahead of what they perceive to be significant price hikes in the grocery store.

How Inflation Impacts Your Grocery Bill

Inflation measures how much more expensive a group of goods and services has become over the course of a year, or another set period of time. The economy becomes unstable if inflation increases too quickly, and President Gerald Ford even called it Public Enemy No. 1 shortly after taking office in 1974.

When inflation numbers are high, prices are noticeably higher as well. It costs more to buy food for your family, and often other prices rise in tandem, like gas, transportation, housing costs, energy bills, medical care, clothing, and, well … pretty much everything, to some degree.

If your income doesn’t increase by the same amount, you’ll find it harder to pay for everything you need and still have savings left over. Standard cost-of-living increases are expected—we all know that a loaf of bread or carton of eggs costs a lot more today than it did in 1950. But the Federal Reserve says an acceptable inflation rate is just 2%, so when prices rise too sharply, too fast, it’s difficult to keep up.

Inflation often spikes after money supply increases, like it did during the pandemic when the Fed printed an additional $5.2 trillion in funds for COVID relief. It’s really simple supply and demand—the more money circulating (supply) the less it’s worth (demand). Just like a rare baseball card is worth more than a mass-produced souvenir found in your breakfast cereal box.

So now we’re in a situation where the price of groceries and other staples is definitely on the rise. We just can’t seem to agree on exactly how much.

Government Reporting vs Consumer Perception

The BLS says “food at home” (meaning grocery) prices are up by almost 12% over the past year, which is substantially higher than inflation in other categories. But grocery shoppers claim they’ve risen much more than that—over 22% on average. If we focus just on fresh meat and vegetables, the government reports a 4.5% increase. However, consumers perceive a 25% surge in prices.

Those living paycheck to paycheck or struggling to pay bills perceive the largest price hikes at 27%. Those not living paycheck to paycheck report a more moderate 17% increase in food prices.

So is consumer perception just in their collective imagination? Or are shoppers seeing patterns that the government data crunchers missed? The answer to that question isn’t really clear. But what is evident is that consumers are looking for ways to save money at the grocery store in an effort to combat inflation.

Grocery-Buying Trends By Age

According to the PYMNTS study, almost 70% of consumers have changed the way they shop in order to save money. And different demographics tackle the issue in different ways.

Millennials are most likely to switch to lower-quality alternatives, with 42% doing so. In comparison, only 28% of Baby Boomers and Seniors were willing to sacrifice the quality of their purchases. Digging further into the data, it turns out that families with kids are the most likely to choose lower-quality items, with 41% doing that compared to only 29% of childless couples.

Across all ages, 47% of people struggling to pay their bills are choosing lower-quality options, while 67% are cutting back on non-essential items. But only 20% of those who don’t live paycheck to paycheck have downgraded quality.

Boomers and Seniors prefer to simply buy less than before, or prioritize just the essentials, with 39% choosing that route. The youngest generation studied, Gen Z, is close behind at 38%. Gen X follows at 33% while only 28% of Millennials are going with that solution.

How to Save Money on Groceries

There are many ways to , like shopping around, using coupons or store apps, and finding deals. But here are some additional strategies that others are using to fight inflation at the grocery store.

Cut down on non-essentials

Focusing on just the essentials usually means reduced payment at the cash register. When cutting out non-essential grocery items, the most common move among survey recipients was to forgo specialty and prepared foods.

So buying raw chicken and cooking it yourself instead of getting the pre-cooked BBQ chicken at the deli is likely to save you money, even if it takes more time to prepare. This is a common choice we have to make in life—you can spend your time or your money, and which you choose depends on what you have more of.

Buy cheaper alternatives

Brand-name products cost more because corporations throw big budgets at advertising, brand recognition, and pretty packaging. And that all works well, because many people think the no-name or store-brand versions of products are inferior.

But in fact, the house brand is not necessarily lower quality. Often it’s the exact same product, made in the exact same factory, but private labeled for the grocery chain so they can have a lower-priced line with their own name on it. There are also dedicated store brand manufacturers that supply the same products with different labels to a variety of chains. But no matter what label is on the product, they all have to live up to the same standards and requirements.

Focus on frozen

If fresh produce is too expensive, check out the frozen foods section for your veggies and fruit. Often the frozen version is cheaper and just as nutritious as the fresh. Canned fruits and vegetables are usually the cheapest of the three, but they’ve also gone through the most processing—likely through heat treatment, which removes some nutrients and changes the consistency. They may also have added sugar or salt. So this is another common choice in life—the trade between price and quality (but canned vegetables are still pretty healthy).

The same things can be said for seafood and other meats. Fresh is the most expensive, but frozen or canned can be great options, and often just as tasty. In this case, you wouldn’t worry about the canned heat treatment since you almost always cook your meat anyway.

Strategize your rewards

There are numerous reasons to shop with a credit card. But one of the most compelling is rewards points or cash back. If you have a credit card that gives you higher rewards in the grocery category, use that one for your grocery shopping outings.

The main caveat here is that if you carry a balance, you’ll pay interest that could cancel out the benefit of those rewards. So if you’re using credit cards to earn points or cash back, the best strategy is to pay off each balance in full every month.

Conclusion

Regardless of what official stats say about inflation, you’re likely feeling some financial stress at the grocery store lately. Luckily, there are many ways you can save money on groceries, from couponing to choosing store brands, and from cutting down non-essentials to collecting rewards on your credit card.

If you’re in the market for a credit card that offers premium rewards on grocery purchases, see if you pre-qualify for the Platinum X5 Visa. It offers 5% cash back rewards in specific categories, including groceries and gas, for the first $5,000 spent.