54% of young Americans say food costs are the biggest strain on their finances
Younger Americans are feeling the pinch from inflation, with 54% saying that rising food costs have hit them the hardest.
The findings are part of a recent CNBC/Generation Lab survey that polled 1,033 people between the ages of 18 and 34. When asked where in their budget inflation affected them the most, respondents choose food by a significant margin:
- Food: 54%
- Rent: 22%
- Discretionary spending: 10%
- Health care: 6%
- Utilities: 5%
Overall inflation has cooled off since its 9.1% year-over-year peak in June 2022, but it continues to rise at a 3.5% year-over-year pace as of March, according to the most recent data available from the consumer price index, which tracks the price of goods and services over time.
Higher borrowing costs are another factor leading to younger people feeling strained, as the average credit card balance for Gen Z and millennials increased 62% and 50%, respectively, between March 2022 and February 2024, according to a recent Intuit Credit Karma survey.
Food prices are outpacing overall inflation
It's perhaps not surprising that food costs have hit younger people the hardest, considering that they've risen by 25% in the last four years, compared with 21% for all items tracked by the consumer price index.
Money Report
While wage growth has outpaced inflation since early 2023, the significant run up in grocery and takeout food prices over the past four years has been hard to ignore, especially for low-income earners. Younger workers tend to make less money since they are earlier in life, so necessary expenses like food costs can take up a greater share in their overall budget.
"The way people used to cut back on spending on food was to go to eat out less. That is still an option, of course, but with groceries costing so much more, people are feeling more squeezed," says Carla Adams, a certified financial planner in Michigan.
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Consequently, food costs might be felt on a daily basis, compared with, say, rent costs, which have also risen dramatically in the last four years.
Increased food costs have affected low-cost staples like fast food, too, the prices of which have recently exceeded the overall rate of inflation.
"Everyone needs to eat every day, and anything a step above microwave ramen is a small joy that was accessible to many without breaking the bank," Adams says. "Now, not so much."
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