by Sophie Milam
The global food crisis also impacts American consumers. During the last two decades, retail food prices have been quite stable, increasing an average of 2.7 percent per year. But in 2007, grocery prices rose 4.2 percent, the largest annual increase since 1990. Price increases for the first six months of 2008 outpaced the increase in all of 2007. Overall food inflation masks much sharper growth in specific food items, many of them staples for American families. Milk, bread, flour, and eggs have seen double-digit food inflation in the last year.
Low-income families spend a greater share of their household budget on food—17.1 percent compared to the U.S. average of 12.6 percent. Most families can shift spending around to make up the difference, but low-income households have less flexibility to absorb higher food costs, particularly in an economy with increasing unemployment, stagnant wages, and sharply higher gasoline and utility costs. Rising food prices and the weak economy have increased the number of people seeking food assistance. Participation in SNAP (formerly the Food Stamp Program) approached record highs as the number of families seeking assistance from the program jumped more than 8 percent. Fortunately, SNAP and the school meals programs have entitlement status, which means they can expand to meet rising demand and serve all who are eligible. Other programs, like the Special Supplemental Nutrition Assistance Program for Women, Infants and Children (WIC), receive annual appropriations from Congress and operate on a fixed budget. For these programs, higher costs due to rising food prices limit the number of people the programs can serve—even at a time of greater need.
It is important to remember that higher food prices impact all low-income families, even those who do not qualify for nutrition assistance. Eligibility rules for nutrition programs are largely income-based, so families hit hard by higher food costs do not suddenly become eligible for federal food assistance just because they are spending more on groceries. These families have nowhere to turn but to our nation’s food banks, which have reported a 20 percent increase in requests for help. Unfortunately, food banks suffer the same diminished purchasing power as the families they serve. Rising food and fuel costs make it more expensive for food banks to purchase and transport food. And because of the weak economy, private food donations have declined by almost 10 percent. Food banks are left with reduced capacity to serve just when people need help the most.
In the short term, the United States must ensure that nutrition assistance programs have the funding they need to absorb increasing food costs and participation levels, and that benefits keep pace with the price of food. In the long term, we must reevaluate the formula that determines how nutrition assistance programs adjust for food inflation.
Sophie Milam is a senior policy analyst in Bread for the World’s Government Relations department.
