The Food Inflation That Nobody Is Measuring: Why Your Grocery Bill Is Rising Faster Than the CPI Shows

What was once a $55 basket—a dozen eggs, a block of cheddar, pasta sauce, a bag of apples, coffee, and paper towels—ended up costing $84 on the receipt from a quick grocery run in Brooklyn last weekend. Nothing unusual. The cashier hardly raised her head. The real argument against the official inflation narrative, which maintains that food prices at home are barely changing, is that kind of scene, which is repeated thousands of times every day across the nation. The Bureau of Labor Statistics is correct on paper. No one believes it in kitchens.

The math is correct in and of itself. A basket of goods’ change over a 12-month period is measured by the CPI. For the majority of 2024 and into 2025, food at home has lagged behind by about 1 to 2 percent by that measure. The problem is that every January, customers don’t reset their memories. According to USDA data, baseline grocery prices have increased by almost 25% since the pre-pandemic world of 2019. For a consumer, a loaf of bread that cost $2.79 back then and $3.49 today is not “low inflation.” The tax is ongoing.

What the CPI silently overlooks is another issue. Technically, BLS unit-price adjustments capture shrinkflation—the practice of substituting a 16-ounce bag for a 14-ounce one at the same price—but they do so imperfectly, particularly for packaged goods that fluctuate rapidly. Cheaper ingredients, thinner cuts, less olive oil in the sauce, and more air in the chip bag make skimpflation even more difficult. Rarely do reformulations appear as “price hikes,” but all consumers are aware of them. According to a Purdue survey conducted last year, consumers perceived food inflation to be between 6 and 7 percent, which is about three times the official rate. That is often referred to as a cognitive bias by economists. The consumers may be more realistic than the index.

Even mainstream economists acknowledge that something stickier is happening in the labor piece. Restaurant meals and highly processed packaged foods rely on wages that have not decreased and most likely won’t. Balagtas at Purdue has been direct about this: the majority of the factors that contributed to food inflation during the pandemic have subsided, but labor has not, and its effects are felt in areas that are most important to middle-class households. A Trader Joe’s receipt or a Chipotle line can demonstrate the impact. Since 2019, menu prices at fast-casual restaurants have increased by 30 to 40 percent, but there hasn’t been much discussion of this as a policy issue. That has somehow become the norm.

There is a political aspect that is seldom expressed clearly. Election results, wage negotiations, Social Security adjustments, and Federal Reserve decisions are all impacted by headline inflation figures. Cost-of-living increases will continue to lag behind if the official CPI understates what families actually experience due to index methodology, substitution assumptions, and hedonic adjustments. This is why the frustration expressed in exit polls makes much more sense than pundits claim. In surveys, both Democrats and Republicans overestimate food inflation, but Republicans do so more frequently. They are not incorrect because of this.

Observing this develop, it’s odd how infrequently the discussion shifts from whether or not customers are “misperceiving” prices. Really, they aren’t. Instead of measuring annualized change, they are measuring cumulative pain. It’s still unclear if the BLS will eventually be able to capture that or if the disparity between statistics and supermarkets will continue to grow. Until then, Americans are most consistently reminded that the economy in their cart differs from the one on the chart in the grocery aisle.