Inflation Update: Cheaper to Eat Out than at Home as Recession Likely

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Food inflation has now made it cheaper to dine out than at home, while experts say a recession is more likely than not. The latest updates and predictions on inflation and how it could impact your personal finances.

Food inflation: Cheaper to eat out than at home

Grocery inflation is hitting consumers hard, with supermarket bills so high that, in some cases, it costs less to dine out than it does to shop and cook at home.

David Ortega, a food economist at Michigan State University, told the New York Post that in the last year, “grocery prices increased 13.1%, whereas food away from home prices increased substantially less than that–at about 7.6%.”

That 5.5% gap is one of the largest we’ve seen in recent years, Ortega said, while noting that the 13.1% increase in grocery store prices is the largest scene since early 1979, when the US was hit hard by the oil crisis.

Of course, if one has to travel to dine out, then transportation costs could still make eating at home less expensive. Plus, eating somewhere other than fast food or take-out establishments means tipping would add to the cost of your meal.

Some food prices are higher than inflation

Shoppers are acutely aware that the 13.1% “grocery inflation” is a number that is an average for all products. But the inflation on certain specific food items can be much higher.

A report by the New York Post in July found several items that cost more than overall inflation. Poultry was up 17.3%, canned vegetables by 14.3%, rice by 11.9%, fish and seafood by 11%, and bread by 10.8%

NBC reported a year-over-year increase of eggs that jumped by $1.12. A report by Today found bacon jumped by 15.6% and milk by 11.2%.

Inflation outlook: Experts foresee a recession

Despite improved economic data for July, with increased job growth and decreased unemployment, many experts still foresee inflation continuing to increase into 2023 and leading to a recession.

Bloomberg reported that economists predict that “the Personal Consumption Expenditures (PCE) index, which the Fed uses for its inflation target, is seen averaging an annualized 2.5% at the end of next year, up from 2.3% in July the the year-over-year core PCE price gauge.”

“Economists project the year-over-year core PCE price gauge…to average 2.9% in the fourth quarter of next year, up from last month’s 2.6%.”

Bloomberg surveyed 56 economists in early August and arrived at a 49% probability of a recession over the next 12 months, up from 47.5% in July. A slight dip in GDP is expected.

According to a report by Comerica: “The differential between 2-year and 10-year Treasury yields, the Conference Board’s Leading Economic Index, small business sales expectations, and unemployment insurance claims are flashing red to an extent rarely seen other than before or during a recession. These core economic forecasting tools now say a recession…is more likely than not.”