Geographic Inequality in Food Inflation

Data Stories in a Minute:

Summary:

Using NielsenIQ Retail Scanner data, we study how food inflation varies across regions with different income levels and the role of retailer market structure. From 2006 to 2020, for the average consumer, food prices-as measured by the personal consumption expenditures (PCE) price index for food and beverages-rose by by about 1.8 percent per year. However, this aggregate increase masked substantial spatial heterogeneity. Poorer metropolitan statistical areas (MSAs) experienced annualized food inflation that was half a percentage point higher than that of richer ones-amounting to a cumulative difference of 8.8 percentage points over the period. We show that higher retailer concentration-that is, markets with less retailer competition-in poorer areas is one contributing factor to the higher food inflation that consumers in these locations faced.

Key findings:

1. Consumers experienced higher food inflation in poorer areas relative to richer areas from 2006 to 2020.
2. During this period, annualized food inflation was half a percentage point higher in the poorest decile of MSAs relative to the richest decile of MSAs.
3. Using a natural experiment of the 2014-15 bird flu episode, we can establish a causal link between market concentration and inflation.

Center Affiliation: Economic Survey Research Center

JEL classification: E31, I31, R12

Key words: inflation, spatial inequality

https://doi.org/10.29338/ph2026-01