Grocery prices are on the rise — here are 6 ways to keep your food budget under control

Here's how to keep your food budget low while on lockdown, according to experts.
Image: US-VIRUS-HEALTH-EPIDEMIC
Instacart employee Monica Ortega walks past empty racks while picking up groceries from a supermarket for delivery on March 19, 2020 in North Hollywood, Calif.Frederic J. Brown / AFP - Getty Images
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By Megan Leonhardt, CNBC

As the coronavirus pandemic continues, shoppers have had to contend with higher prices on many common food items, including meat, milk and eggs. The Labor Department reported Tuesday that consumers paid 2.6% more for groceries in April than in March — the largest one month increase since February 1974.

The price of meat, poultry, fish and eggs rose 4.3%, cereals and bakery products jumped 2.9%, and fruits, vegetables and dairy goods all gained 1.5%. The price index for eggs alone climbed just over 16% — the biggest increase for any single food.

Shoppers shouldn’t expect prices to fall as states reopen. “I think this is the new normal for a while,” says Phil Lempert, food industry analyst and editor of SupermarketGuru.

That’s because everyone — from farmers to producers to processing plants to grocery stores — is going to have to make huge investments in personnel and product safety. On the farm and food processing side of things, there will need to be worker social distancing protocols put in place. Meanwhile, supermarkets are already investing in increased sanitation procedures, plexiglass barriers to protect checkout employees and additional staff and security guards to limit customer capacity in stores.

“Prices are going to continue to go up for a while,” Lempert says. “It’s probably two to three years until we can have a more efficient supply chain and then they can be reduced.”

But that doesn’t mean that the prices on all groceries are going to skyrocket or that you won’t be able to find deals. You’ll just need to be careful and creative.

Here are six ways to keep your food budget low while on lockdown, according to experts.

1. Shop around

If you typically do most of your food shopping at the local grocery chain, it may be worth looking at other stores where you wouldn’t normally go, Lempert says. That includes budget retailers like Aldi and Lidl. Part of the secret to these stores’ low prices is that the vast majority of their products are private label, so you’re not paying for the marketing and advertising that many brands use to attract customers.

In fact, CNBC Make It previously found that Aldi offered cheaper prices on more essential products than even Walmart. Dollar stores and grocery outlet stores may also offer better prices, Lempert adds.

Restaurants may also be a good place to find groceries right now. Panera got into the grocery delivery game, allowing customers to order groceries such as milk, bread and fresh produce like tomatoes and grapes alongside their favorite salads, soups and sandwiches. “It’s worth looking at different places to acquire food,” Lempert says.

2. Shop local

With the weather in many parts of the country starting to warm up and many of the stay-at-home orders ending, expect farmer’s markets and community supported agriculture (CSA) programs to re-start. When they do, those may be great resources for shoppers looking for more variety at relatively stable prices, Lempert says.

“There may be a better selection as CSAs could be less impacted by some shortages,” says Veronica Lehman, part of the emerging brands team at food and beverage consulting group JPG Resources.

Additionally, shoppers should check out farms in their area. “We’re now seeing a lot of farmers selling direct to consumers,” Lempert says. Smaller meat processors who have not been affected by coronavirus are also selling direct, he adds.

“Farmers have really been hit hard with this,”Lempert says. Many are innovating to find ways to get their produce and products to consumers by partnering with local grocery stores or setting up online shopping and delivery options.

3. Buy private labels

If you’re looking to cut costs, shop the store’s own brand, Lempert suggests. It’s almost always cheaper than national name brand products by 20% to 30% on average, he says.

You won’t lose out on quality. In the 2019 Private Label Manufacturers Association (PLMA) annual report, two-thirds of consumers agreed with the statement: “In general, store brand products I have bought are just as good, if not better than the national version of the same products.”

4. Pick up frozen first

While the price of meats, poultry, fish and eggs rose 4.3% in April, the cost of frozen varieties of those same products has remained more stable, Lempert says. “You’re going to see less price increases there, especially on the meat, beef, chicken type of products,” he adds.

Shoppers don’t need to stress about finding these products as much now as at the beginning of the pandemic when many Americans were stocking up on supplies. “I know a lot of frozen food cases were decimated for the past couple of weeks, but for the most part, they’ve now been restocked into almost full,” Lempert says.

5. Pay attention to ingredients

The prices on some pantry staples may be stable now, but the ability to keep those prices consistent in the coming months will depend on their ingredients, Lempert says. Take boxed macaroni and cheese. It has milk as a major ingredient, so it’s more likely to have a price increase than a wild rice mix because the price of dairy products are already up 1.5%.

That said, price increases on shelf-stable items are going to happen slower because they’ve been stored more in warehouses and the increased costs of raw materials haven’t hit the products on the shelves just yet.

“We have not seen price increases across the board,” Lehman says. “It’s mainly just in items that may be vulnerable to inventory shortages.” That’s the case for meat, which is a far more concentrated industry compared to other sectors. There’s only a handful of brands and suppliers in the meat department of your local retailer, but there are a ton of snack food companies, so you likely won’t see price spikes on those items yet.

While it’s a good idea to continue to purchase self-stable products right now, start to pay more attention to prices on products that contain ingredients that may have had more challenges during the pandemic.

6. Avoid prepared foods

If you’re looking to trim your food budget, it’s worth considering making everything from scratch and skipping prepared foods or meals that come from a box, Lehman says. Not only are these generally more expensive, but the company making the meal may soon start passing on the higher raw ingredient costs.

“Buying fewer prepared foods and more ingredients to cook meals from scratch is cost effective,” Lehman says. Think about purchasing pasta, ground beef, tomato and spices separately instead of picking up a boxed pasta meal.

At the end of the day, economic forces around supply and demand are driving most of the price increases we are seeing, Lehman says. “Some retail demand, while related to fear, is the result of living with these unfamiliar patterns,” she says.

Plus, many consumers are still adjusting to cooking more meals at home. As a result, consumers are not sure how much food to keep on hand for daily meals and how long things last. “They’re just beginning to getting a real sense of what’s needed and how far they can be stretched,” Lehman says. As we all adjust, that will also help prices and supplies stabilize.