Food Price Inflation Since 1913

On March 4, 1913, the last day of his presidency,  President William Howard Taft signed a bill promoting the Department of Labor to a Cabinet-level Department. That same year they began tracking consumer prices. This is also the same year that the Federal Reserve was formed to manage the money supply. Perhaps Taft worried that putting a bunch of bankers in charge of the money supply was like putting the fox in charge of the hen house and so the country needed a cabinet level department to keep an eye on them?

Food Price InflationWhatever the reason, that the Consumer Price Index was formed, a guage, or measuring stick now exists to compare prices across the ages.  Although some people believe that the numbers on the stick may have been adjusted a bit, none-the-less it is all that we have (other than the price of gold).

So I thought on this 100th anniversary of the Consumer Price Index that I would take this opportunity to compare the price of food items then and now.

Food Price Inflation

If you were to imagine the typical shopping list of basic foods in 1913 there of course would be no frozen dinners, pizza, potato chips, yogurt, ice cream or other processed foods. The typical shopping list from the “grocer” would be more like bread, milk and eggs. Even coffee was not the ground type we have today, but rather whole coffee beans.

In 1913 bread cost an average of 5.6 cents per pound. Today according to the Bureau of Labor Statistics the average loaf costs $1.422 per pound. Milk went from 35.6 cents a gallon in 1913 to $3.53 in 2013 a roughly 10 fold increase. Eggs were 37.3 cents per dozen in 1913 and now average $1.93 per dozen.  The following table from the BLS shows a variety of food items and how the prices have changed. Interestingly, not everything (even in the food category) increased by the same percentage, for instance eggs “only” increased 418% while potatoes increased a whopping  3819%.

In 1913 potatoes were considered a staple of everyday life and were the cheapest item on a per pound basis (costing less than 2 cents per pound) followed in close second by flour at just over 3 cents a pound and sugar at 5.8 cents a pound. Today flour is the cheapest on a per pound basis followed by potatoes (despite the massive percentage increase) and sugar.

Item Average price (dollars)
January 1913 January 2013  % Increase
Bread $ 0.056 $ 1.422 2439%
Flour $0.033 $0.524 1488%
Fresh milk, per gallon(1) $0.089/quart (or $0.356/gallon) $3.526 890%
Cheese $0.222 $5.832 2527%
Butter $0.409 $3.501 756%
Coffee $0.299 $5.902 1874%
Potatoes $0.016 $0.627 3819%
Rice $0.086 $0.715 731%
Sirloin steak $0.238 $5.705 2297%
Round steak $0.205 $5.074 2375%
Chuck roast $0.149 $3.696 2381%
Pork chops $0.187 $3.465 1753%
Bacon $0.254 $4.407 1635%
Ham $0.251 $2.693 973%
Eggs, per dozen $0.373 $1.933 418%
Sugar $0.058 $0.683 1078%

Footnotes: (1) Milk average prices were recorded per quart in 1913 and per gallon in 2013; the 1913 average prices have been converted to gallon equivalents. Milk was further characterized as “whole, fortified” in 2013.

Note: All average prices are per pound, unless otherwise noted. Source: U.S. Bureau of Labor Statistics.

Standard of Living vs. Food Prices

Despite the massive increases in food prices we really don’t know how much better or worse off the average family is unless we look at household income compared to how much we spend on food. In other words, percentage of income spent on food. We look at this more in depth in the article Cost of Living: How Much of Your Budget Goes to Food? and Lynn Carpenter’s Cost of Living- Real Basket of Goods but basically the BLS estimates that U.S. citizens spend approximately 14% of their household income on food (8.3% at home and 5.8% at restaurants). But it is difficult to compare that directly with 1913 because many modern households have two incomes while in 1913 the majority of households had one fulltime income, plus the wife may have only had “egg money” from selling home grown produce and eggs. The average annual income in 1913 was only $800/yr.  In 2012, the median household income was $44,389. and had 1.35 wage earners so if we divide $44,389 by 1.35 we get an average annual income of $32,880. Thus the average annual income increased by 4010% so even potatoes have become relatively cheaper i.e. our standard of living has increased.

As we said in the differences between 1913 and today, another sign that our standard of living has increased, we can look at the differences technology has made… rather than eating potatoes, bread, milk and eggs you will find much more processed foods in today’s shopping cart. Typically you will find packaged and frozen foods and families eating out more. Although we consider this a sign of an increased standard of living it is probably also leading to a less healthy lifestyle and higher healthcare costs.

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Photo by Bob Mical

 

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Comments

  1. Chuck says

    Hi Tim,

    I came across this post while searching for price increases since 1913 and really enjoyed it. One other factor in the price of certain foods is agricultural subsidies, which have been around for a long time, but have ballooned since the days of Ag Secretary Earl Butts. The subsidies, besides resulting in tax increases, change the market price of certain commodities because of the way they incentivize production quantities. For instance, corn and soy prices are much lower than they ever have been. It’s interesting that the price of beef has increased over 2000%, but imagine how different that would be if they weren’t force-fed subsidized corn, which is in turn fertilized with subsidized petroleum-based fertilizers. Would they be even more expensive? Not necessarily, because the Fed’s inflationary manipulation of the money supply is still the driving force behind all of these factors. I wonder what our nation (and the world) would be like today if Woodrow Wilson had not succumbed to the, “Jedi Mind Tricks,” of international bankers?

    • Tim McMahon says

      Chuck,

      Good point. I often wonder what our world would be like without all the misallocation and “Jedi Mind Tricks”. What would the world look like without the U.S. wasting trillions in Iraq ? or Bailing out the Banksters? Maybe without the first the second wouldn’t have been an option? Or if there was no Freddie and Fannie the bailout wouldn’t have been necessary and our country would still have a healthy growing economy. But back to corn… first we have subsidies and then we have mandated ethanol, while the price of Natural gas is getting cheaper but the government won’t approve export facilities to improve our balance of trade.

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