Groceries on credit

Posted on July 22, 2011 by

I’ve been really feeling the squeeze in my grocery budget, but I’ve been amazed that lower-income people aren’t complaining louder. If I’m doing without, how are they doing? Even with food stamps, I’d expect that they’d be hurting pretty badly.

But I didn’t consider credit cards. Food stamps and credit cards are the “bread” of “bread and circuses” (TV and porn being the “circus” part). How much longer can this keep on keeping on?

From Bloomberg:

Consumers in the U.S. are increasingly using credit cards to pay for basic necessities as income gains fail to keep pace with rising food and fuel prices…

“Consumers, particularly in the lower-income end, are being forced to use their credit cards for everyday spending like gas and food,” said Tavares, who’s based in Atlanta. “That’s because there’s been no other positive catalyst, like an increase in wages, to offset higher prices. It’s a cash-flow problem.”

Things will soon get worse, as in all likelihood food stamps and social security payments will not keep up with inflation in the future (even less than is already the case) because of a move to a “chained” consumer price index (C-CPI). From Business Insider, an explanation of how that works:

The C-CPI assumes that consumers are making different choices right now. Because of the economic down-turn, they’re substituting cheaper products for the ones they used to buy (say, going for the cheaper apple versus a more expensive peach at the supermarket, or buying cat food instead of ground beef). It presumes that consumers are effectively changing the real CPI number.

Using the C-CPI, rates would re-calibrate every two years according to a reading of consumer spending… They call it “chained” because it will be tied to actual spending, instead of being a fixed basket of goods like the current CPI.

Get that? No more peaches for you, Grandma!

But never fear, Walmart is here! According to the Huffington Post:

Wal-Mart Stores Inc., the nation’s largest retailer, says it will open 275 to 300 locations in urban and rural areas by 2016, expanding food options in more than 700 food deserts. The new stores will be under the supercenter and Walmart Market formats, but not the Walmart Express model because that concept is still being tested.

Wal-Mart said it has opened more than 200 stores serving food deserts since 2007, and the roughly 500 or so stores will serve about 1.3 million people living in those areas.

Grandma, I think you might want to start that old vegetable garden up again. Just in case Walmart doesn’t stock peaches.