Food Price Inflation in the United States and Other Countries

The report responds to a request for information on: food price inflation in the United States; how food prices compare to those of other consumer goods and services; how U.S. food prices compare with those of other countries; and what other countries have done to combat food price inflation.

Since 1972, food prices have risen an average of 9 percent a year and have increased faster than the general inflation rate. However, Americans are spending less of their disposable income on food while other goods and services such as housing and transportation have absorbed increasingly more of the consumer's disposable income. Although food prices in the United States are higher than they used to be, they have been the lowest among many developed countries. Many European countries attempt to stabilize their food prices through agricultural policies that generally keep farm prices high. These countries compensate for differences between their higher domestic prices and lower world prices for agricultural goods by subsidizing their farmers or by levying taxes on cheaper imported goods. In the United States, increases in the costs of processing, packaging, transporting, and selling food have contributed heavily to higher food prices. Even though food prices in the United States are lower and rising less rapidly than in many other countries, opportunities to improve productivity and stabilize food costs in both the marketing and farm sectors should be sought.