The first thing most Americans think about when they enter a recession, is the impact it could have on their ability to keep a job. While this is possibly the largest element to managing a recession, it’s also important to know how a recession can affect the major costs faced by American consumers. Groceries are considered one of the top categories where Americans put their money, and are something you have to keep buying regardless of the economy. With that in mind, if you’re interested in knowing how a recession could impact your food costs, keep reading.
Recessions typically cause fear of increased costs, and a decreased ability to pay for them. Things like rent, loan rates, and more might increase as a deep recession sets in. With the current 40-year high inflation rate, it wouldn’t be unlikely to see costs increasing in other areas as well. Utility costs are expected to be high this summer as we face a drought, which you can read more about here, as well as already high car and home prices not showing too many signs of majorly slowing down. With all these increasing costs, it goes without saying that food might increase as well – right?
As with most things, the answer to that question is complicated. Recessions typically see families using more coupons, switching to generic brands, and buying in bulk in order to mitigate increased prices. Many American consumers have already made these adjustments over the last few months, but that doesn’t mean there isn’t any reason to get started now. As demand, inflation, and supply chain woes begin to cool you may actually see a decrease in food prices at your local grocery store. Your average recession has typically only shown modest increased food costs, which may be further mitigated by the Federal Reserve actively trying to curb inflation.
Food prices already fell over 2% in July as recession fears ramped up, and the Food Price Index has fallen for three months in a row. While there are many different uncertainties, including the war in Ukraine, Chinese lockdowns, and droughts that can have an impact on supply the government is trying to mitigate some of these costs with lower inflation. As complicated as all of that sounds, it means that costs near you likely won’t reach record highs soon – especially if you focus on buying generics, bulk purchasing, and using coupons where possible.
