What increases in food prices mean for people and businesses in the city

As Anna Walsh was shopping in the Loop neighborhood Target in February, she and her friend remarked that the cost for a dozen eggs had now risen to $7.29. The student said this was much more than she was used to.

Food prices in Chicago rose 7.4% in February 2023 compared to February 2022, according to the U.S. Bureau of Labor Statistics Midwest Region. Although Chicago’s food inflation rate is below the national rate of 9.5% for the month of February, the increase is still affecting people in the city.

Certain food products have seen even higher increases in Chicago over the past year, with dairy and related products prices rising 15.9% and cereal and bakery products prices rising 10.6% from December 2021 to December 2022.

Economist Michael Miller explained that the main factors influencing food inflation right now are the rising costs of animal feed, fertilizer and energy. Fertilizer and energy both rely on oil and diesel for creation and transportation. External factors, like the war in Ukraine, are causing increases in oil prices.

One of the other issues causing the inflation of food prices in Chicago is the limited availability of locally grown food. While other states may be able to have a variety of food options available year-round, Illinois needs most of its food to be shipped in. This means that many outside factors can influence Illinois food prices. These inflationary effects have left consumers to make difficult choices.

“You have to consume a certain amount of food. You have no choice, but you can cut back, you can buy a little bit less,” said Miller, a DePaul professor.

Miller explained that usually consumers will respond to these price increases by making substitutions like buying cheaper meat options or purchasing frozen vegetables instead of fresh ones. However, for consumers with limited finances, sometimes substitutions aren’t enough.

The Effects of Food Insecurity

The Irving Park Community Food Pantry has noticed the effect that rising food costs has had on their patrons. In the first week of January, the pantry had some of its highest numbers for a Tuesday and Wednesday distribution night. Prior to the pandemic, the pantry was serving 200 to 300 families per month. Now, they are serving around 500 families per month.

“Over the last six months or so, our numbers have been kind of going on an upward trend … we are seeing that people are needing a little bit of help to get through this situation,” said the pantry’s executive director, John Psiharis.

The Irving Park Community Food Pantry, like hundreds of other food pantries in the greater Chicago area, gets most of their food from the Greater Chicago Food Depository.

The Greater Chicago Food Depository began to see a rise in need during the pandemic and this has only continued, according to their director of communications, Man-Yee Lee. She says that food insecurity peaked in the first year of the pandemic but began to lessen in 2021 as programs like the child tax credit were increased, but things have started to worsen once again.

“As inflation of food prices have started to rise, so has food insecurity,” Lee said.

Lee says that across the depository’s partner network of over 700 food pantry sites, there was a 26% increase in people accessing pantries from October 2021 to October 2022.

For Chicago residents rising food costs are especially hard to deal with right now due to other economic difficulties.

“This is not the only issue that they’re dealing with. There’s increases in living expenses and rent, there’s interest-rate changes in terms of credit cards, there’s decreases in the amount of government aid that’s been out there, and some of the aid that has been out there is being pulled back. So collectively, it cannot really be good for our clients,” Psiharis said.

How people are dealing with inflation

Some Chicago residents have been able to combat parts of this by looking for additional or better-paying work.

“I got a better job around the exact same time [as inflation rose], so luckily that kind of balanced it out. But if I was going on what I had been making about a year ago and the prices changed, it would’ve been a big struggle, and I think the quality of the food I got would go down a lot,” said Chicago resident Naomi Brenneck.

However, for some residents, this is not an option. Irving Park Community Food Pantry has a large client base who are elderly and on fixed incomes like Social Security or pensions, so they have limited options when the price of necessities goes up.

The owner of Lincoln Park family-run restaurant Mo’s Asian Bistro, David Mo, said it surprised  him when he placed his restaurant’s meat and produce orders this year because all the prices had gone up.

While consumers may notice the increased price of food when they’re grocery shopping, this isn’t just affecting shoppers. Food has also become more expensive for businesses.

Businesses and organizations like restaurants and food banks largely buy their food in bulk at wholesale, and many of these products have seen dramatic price increases due to inflation over the past year.

Serving the community

The Greater Chicago Food Depository has seen the effects of rising food prices for their organization as well as their patrons, says Lee.

“The food depository is spending now twice as much on food as we did nearly two years ago. In fiscal year 2022, we spent $36.8 million purchasing food and that was a 62% increase compared to what was spent in fiscal year 2021 … That’s a big difference,” Lee said.

Nationally in 2022 the cost of wholesale dairy was up over 18%, wheat up 31%, vegetables 51% and eggs a whopping 163% compared to 2021, according to the U.S. Department of Agriculture (USDA). These large price increases mean that businesses’ bottom line will shrink unless they get assistance, cut back or pass the expenses onto the consumer.

Lee explains that while the food bank is still able to provide for its partner pantries across the city, there is more of a need for financial donations to make up this difference, especially as pandemic-era federal government assistance winds down. 

Under the U.S. Department of Treasury’s Coronavirus Relief Fund, the CARES Act provided funding to state and local governments, which the USDA says was used in part by state governments to procure food supply for food banks. CARES Act funding has since ended.

The business effects

These rising wholesale costs are also having large impacts on the restaurant industry. 

Salma Sid, manager at a Freshii restaurant located at the Palmer House in the Loop, has noticed the effects of inflation.

“In general the cost has gone up by at least 20% to 30%, which is a huge number when running a small business,” Sid said.

These rising costs have cut into restaurants’ profit margins. Miller explains that this puts restaurants in a difficult position.

“What do restaurants do when the price of eggs are up something like 60% and in some places, you can’t even get them?” Miller said. “What do you do when you serve somebody a three-egg omelet? Do you leave the price the same and do you not have any profit? Or do you have to say, ‘I’m sorry, I have to scratch that price out and put on a new one for the omelet’?”

The difficult decision of pricing

Sid says his Freshii location has not raised prices yet but may have to soon due to the inflation of food prices. However, he says they can’t raise prices without impacting customers.

“You can increase, like, maybe 5% or 10%, but then if the rise in the cost of goods is 30%, you cannot raise anything 30% all of a sudden,” he said.

Small independent restaurants are also feeling the effects. Mo’s Asian Bistro has had to make decisions about pricing due to rising food costs.

“Just having to supply the fish is really expensive compared to how it used to be. We used to be able to do very discounted sushi on Sundays and Mondays. We still do that, it’s just now it’s a significantly different price. So, I’ve definitely seen a shift,” said Venice Albania, a server at Mo’s.

Albania, who has been working at Mo’s for two years, says that the restaurant has tried to keep price raises to a minimum because they know that their customer base is largely DePaul students who often can’t afford to spend more, even with their student discounts.

The consumer effects

Miller says that when restaurant prices rise, it has a ripple effect and consumers are often responsive and might look for more affordable options on the menu while dining out.

“You might go and you could end up with a cheaper cut of beef, if what you’re going to have is, ‘You know, I normally have a really good steak, I’m going to have the cheap steak, or I’m just going to have to go with a Swiss steak or something like that, or a meatloaf,’” Miller said.

According to a Pew Research study from January, 75% of Americans are very concerned about the price of food and 54% of Americans think the affordability of food will be worse in 2024.

Although customers may not be happy to see restaurant prices rise, Albania explains that for small businesses like Mo’s, they don’t have a choice if they want to stay afloat.

“I know it seems kind of like you always want to get mad at the business owner, but with the way that the economy is right now, it’s really impossible to keep things at such a low price. At the end of the day, everyone is fending for themselves,” Albania said.

“Everything is getting expensive”

Food inflation also comes as consumers and businesses are dealing with price increases in other areas. Sid explains that some of the products that restaurants need have become more expensive too.

“It doesn’t take into consideration the cost when we are using a coffee cup or the lid on the coffee or the stirrers. These are the small little things, but then it adds up to your total cost,” Sid said.

Mo explains that this also isn’t just an industry issue.

“It’s not just [the] food business, in general everything is getting expensive,” Mo said.

All these costs have made it harder for businesses to keep going, but inflation is expected to continue to come down. The Federal Reserve Chair Jerome Powell told Congress earlier this month that the Fed plans to do more to address inflation in the coming months, including raising interest rates. 

Miller says that it could take up to a year for inflation to come down to around 3% or 4%. In the meantime, food access will continue to be a struggle for some Chicagoans and businesses will have to get by with less.

Header illustration by Magda Wilhelm