Food stamp expansion linked to 15% spike in grocery prices

The Biden administration’s push to increase food stamp benefits will cost around $1 trillion over the next decade, according to the Congressional Budget Office and reported by The New York Post.

The expansion is being linked to a 15% jump in grocery prices, according to a government watchdog report. 

The Department of Agriculture rolled out revised nutritional standards for the Supplemental Nutrition Assistance Program (SNAP) in 2021 that expanded by 27% on average from pre-COVID pandemic levels, according to the Foundation for Government Accountability (FGA), and previewed by Fox News Digital. It went from $4.5 billion in 2019 to $11 billion in 2022, the study said. 

Moreover, spending hit $8.6 billion in March 2023, despite some emergency allotments that expired, and it is expected to rise by 5.8% over the course of the year. 

The FGA is arguing that the increase in spending on food stamps is fueling a rise in grocery prices and contributing to high inflation. 

“USDA cooked their books to hike food stamp benefits by 27% — the largest permanent increase in program history. And they bypassed Congress to do it,” said Jonathan Ingram, vice president of policy and research at the FGA.

The study cited retail scanner data from the World Bank following the Great Recession of 2008 that found food prices go up 1% for each 12.5% hike in per-capita food stamp spending.

Related:How independent grocers can leverage SNAP to boost revenue and loyalty

On average, food prices are expected to increase 5.8% over 2023, according to the Department of Agriculture’s website, and while it is a slower pace compared to 2022, it is still higher than "historical-average rates," the department said.

Fox News Digital reported increased prices for margarine and eggs by more than 50% between December 2019 and March 2023. The price of frozen vegetables rose by 36%.

However, the recent July category update from 210 Analytics (with data provided by Circana) reported single-digit food and beverage inflation for U.S. retail. 

“Shopper choices are all but consistent,” said Anne-Marie Roerink, president of 210 Analytics LLC. “Consumers don’t think month-to-month, but are reacting to the cumulative impact from years of high inflation in all areas of life.” (When comparing July 2023 to July 2020, prices have increased by 24.4%.)

That said, food stamp spending is likely to take center stage in Congress’ expected battle over reauthorizing the Farm Bill, which sets the range of spending from food benefits.