https://www.city-journal.org/article/inflation-hits-the-drive-through
You don’t need to be a close follower of economic data to know that food has gotten more expensive. The sticker shock at the grocery store and the anecdotes on social media reflect the truth: food prices at groceries and restaurants have increased by more than 25 percent in the last four years. That’s more than overall inflation (about 20 percent) and slightly more than average wage growth (about 24 percent). The Wall Street Journal recently reported on USDA data showing that Americans are now devoting more than 11.3 percent of their disposable income on food, the highest percentage in 30 years. While other food-spending measurements show a slightly smaller rise than the USDA’s, Americans are certainly spending more on food than they were immediately before the pandemic.
The data contain one puzzle, though: Americans don’t seem to be cutting back on dining out. Eating at restaurants is rightly considered something of a luxury; the more frugal way to consume food, generally, is to prepare it yourself. As the USDA shows, Americans are spending less of their income on groceries today than they were 30 years ago, even with recent food-price increases. At restaurants, however, Americans on average are spending quite a bit more of their income than they were three decades ago—well over 5 percent today versus about 4 percent in the early 1990s.
To understand this development, some historical perspective is useful. The Bureau of Labor Statistics’ Consumer Expenditures Survey tracks household spending on goods and services back to 1901. Over the course of the twentieth century, BLS reports that households cut the portion of their income spent on food from over 40 percent to about 10 percent. That remarkable change left Americans with much more money to spend on other things, both luxuries and necessities.
The BLS lumps together grocery and restaurant spending for most of its past data but separates the two from 1984 onward. The more recent data also allow us to focus on specific demographics, such as middle-class families (the middle 20 percent of earners in this dataset). In the mid-1980s, middle-class Americans spent about 7 percent of their gross income on food at restaurants, and about 10 percent on groceries. By the late 2010s, these numbers had fallen to about 5 percent on restaurants and 7.5 percent on groceries, similar to the numbers from 2022 (4.6 percent on restaurants and 8.4 percent on groceries).