On the surface, the U.S. economy looks strong. Inflation has decreased from its peak in 2022, the job market is stable, and robust consumer spending is driving GDP growth.

However, these statistics don’t mean much to consumers who are adjusting to a post-pandemic world where grocery prices have surged over 25% since 2019.

“Prices feel like they have plateaued, but they have plateaued at a high point,” shared Hannah Zak, 33, from Warsaw, New York.

Zak mentioned that her $48,000 salary effectively turns into about $33,000 after deductions for taxes, insurance, and retirement contributions, leaving her with minimal disposable income. She has had to forgo certain streaming services, opt for generic brands, and cut back on expenses like haircare products and clothing.

She still feels the impact of inflation when she spends approximately $75 weekly to feed herself and her 7-year-old chihuahua, Princess. If she helps her siblings with groceries, that total easily exceeds $100.

“Like many people, I have mortgage or rent to pay, a car payment, and some debts,” she noted. “I have a decent job that allows me to get by, but there are no luxuries left.”

Consumers are aware that inflation is slowing, but they continue to feel frustrated by consistently high prices, according to Joanne Hsu, director of the University of Michigan’s Surveys of Consumers.

“It’s disheartening to watch a large chunk of your paycheck go towards various expenses,” Hsu stated. “Many individuals do not feel like they are thriving, even though they know inflation is slowing down.”

Consumer Sentiment on Inflation

Price increases have been declining since June 2022, when inflation reached a yearly high of 9.1%. The most recent Consumer Price Index indicated a 2.6% inflation rate year-over-year in October.

This has led to a somewhat improved perspective on the economy compared to 2022, yet overall feelings remain low compared to historical norms, as reported by the University of Michigan’s Surveys of Consumers.

Despite easing inflation rates, high prices seem to be here to stay. Just because inflation has slowed does not imply that prices are decreasing; instead, the rate of price hikes is simply lessening. Although consumers might long for the price levels of 2019 to return, a significant decline in prices—known as “deflation”—often indicates a struggling economy.

“We’re not experiencing deflation, and it’s unlikely we will unless we enter a severe recession,” Hsu explained. “Still, it’s completely natural for consumers to feel exasperated by high prices, even if salaries are increasing.”

From May 2023 onward, average hourly earnings growth in the U.S. has outpaced inflation, as reported by the Bureau of Labor Statistics. However, not all Americans have seen their wages rise in line with the cost of living, and even those with raises still face challenges adjusting to higher expenses.

“People want their wage increases to go towards enjoyable experiences,” remarked Michael Swanson, chief agricultural economist at Wells Fargo’s Agri-Food Institute. “They’re pleased with their wage increases but frustrated that it primarily goes toward covering inflation.”

Adapting to Rising Costs

Lauren Throop recalls her grocery bills totaling $75 before the COVID-19 pandemic. Now, she often spends around $120 to feed her family, including her husband and two children.

“It feels like prices shot up during COVID, with all the discussions about supply chain issues, and then they remained elevated,” she said. “It seems grocery prices are still higher than they ought to be.”

Throop is among a growing number of Americans who have become skeptical about the grocery industry following price increases during the pandemic. Views on the causes of food inflation vary, with some politicians, including President Joe Biden, blaming food and beverage companies for price gouging.

Living in Laramie, Wyoming, Throop has limited grocery options, making it hard to find bargains. Even though she doesn’t prefer Walmart, she has been shopping there more frequently to save on her grocery bills.

“It’s encouraging to see reports of decreasing inflation,” Throop mentioned. “For now, I focus on cooking meals that are less costly. I often prepare salmon because it’s an excellent choice for my growing children.”

Although I used to eat a lot of grains, I don’t do it as frequently these days. I make an effort to cook grains and beans more often because they are less expensive.

Looking Ahead to 2025 and Beyond

Even though inflation is slowly decreasing, some economists are concerned that Donald Trump’s policies on tax cuts, tariffs, and deportations might reverse this progress.

According to Swanson from Wells Fargo, even if inflation shows signs of easing, it may take several years for prices to return to a more normal state, particularly for everyday purchases like groceries.

Giving wages more time to grow beyond inflation could positively affect consumer sentiment, making routine purchases seem less burdensome on household budgets. Consumers also need time to adjust to increased prices after substantial hikes, Swanson added.

“For instance, if you have kids at home and milk is a staple in your shopping, you’d really notice changes in its price,” he explained. “It can take years for people to adjust their expectations. It could take a few years until people start to feel that prices are reasonable again.”