Unlike discretionary items, consumers can't simply stop buying food when prices rise. They may, however, opt for less expensive options.
Over the last 12 months, grocery prices soared 13.1% - the largest annual increase since the year ending in March 1979, the Bureau of Labor Statistics said Wednesday.RELATED: As inflation drives up food and energy costs, how to save money on your electric and gas bill
While commodity prices are falling, it will take time before those lower costs pass through to consumers. Plus, plenty of other costs for producers - such as fuel, labor and packaging - have also been high.Unlike discretionary items, consumers can't simply stop buying food when prices rise. They may, however, opt for less expensive options.
"The consumer has been a little more strapped, so there's a few more meals prepared at home," Penegor said. "Inflation has been high, so net disposable income has been a little bit pinched." The Fed believes that "food and energy are influenced by global commodity prices in a way that tells them, 'Hey, these items aren't really directly under your control,'" noted Michael Gapen, head of US economics at Bank of America Global Research.
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