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During the past four years inflation has battered consumers, and a Rabobank analysis says U.S. consumers have finally hit the wall.
In a report on the cost of a Fourth of July barbecue, Rabobank analysts said consumers are trading down and eating out less often in response to long-running inflation.
“The consumer is waving the white flag on food inflation,” Tom Bailey, senior consumer foods analyst at Rabobank, said in a news release. “With an added 2% in price hikes in 2024 coupled with the cost disparity between dining out and cooking at home at its widest margin in history, we’re seeing heightened fatigue and frugality.”
The 2024 Rabobank BBQ Index, which measures the cost of staple ingredients for a 10-person barbecue, shows that it will cost $99 to host a cookout on the Fourth of July this year, up from $97 last year and $73 in 2018. Cookout ingredients are 32% higher food costs in 2024 compared with 2019, according to Rabobank.
The index showed that the average U.S. consumer has to work an hour to earn enough money for a six-pack of beer and a burger in 2024, up from 51 minutes in 2019, and they’ll have to work nine hours to pay for a barbecue this year, up 32% since 2019.
Produce prices for the BBQ Index are mostly tame compared with a year ago, Rabobank economists said. California’s drought in 2023 sent lettuce prices to more than $100 a carton, well above the average range of $15 to $20 per carton. Rabobank analysts said lettuce prices have come down significantly in 2024.
“We expect leafy greens to have steady supplies, good quality and decent prices,” Rabobank economists said in the release.
Potatoes, also hit hard by drought last year, have rebounded with greater supply based on expanded acreage harvested in the fall of 2023. Potato prices are about half of year-ago levels, the index showed.
On the other side of the ledger, Rabobank analysts said tomato prices have moved higher in 2024 as dry weather in Mexico has curtailed production and overall availability.
Rabobank analysts said a reported 68% of people polled by Vericast say they are switching from restaurants — where the tab is up 4.4% annually — to grocery stores, which have seen only a 1.1% price.
Consumers are pulling back all purchases because of tight budgets, Rabobank officials said. Retail sales were weaker than expected in May as higher borrowing rates and inflation discouraged purchase decisions, Rabobank economists said.
“Retail sales will likely remain soft throughout 2024,” Bailey said.
Wages have not kept up with inflation. Credit card debt, on average, sits at $10,479 per household in the U.S., up from $8,763 in 2021. Forty-one percent of Americans polled by WalletHub say they have more credit card debt now than they did 12 months ago, the release said.
Government aid, such as Supplemental Nutrition Assistance Program emergency payments, the child tax credit, increased unemployment benefits and a suspension of student loan payments have ended, the release said. People under the age of 35 have been hit the hardest; credit card delinquencies in this demographic are at their highest level since 2011, according to the Federal Reserve.
“Fiscal fitness is now more of a focus,” Bailey said. “Saddled with mounting credit card debt, waning savings, and lower real income, consumers are spending less.”