A joint report from the McKinsey Institute for Economic Mobility and the W.K. Kellogg Foundation has identified affordability as a central obstacle to economic advancement for Americans across income levels. The survey of 30,000 respondents revealed that food and grocery prices dominate concerns about cost of living, ranking above other major expenses such as housing and healthcare. According to the latest consumer price index, food costs increased 3% year-over-year, with prices at the grocery store also rising compared to the previous year.
Data from a separate analysis by the Urban Institute showed that many households are turning to credit and savings to manage grocery expenses, with signs of financial strain evident. The research found that approximately 35% of adults used credit cards to purchase groceries and paid their full balance monthly, while 20% carried balances at rates exceeding 20% annually. Additionally, nearly 1 in 10 adults relied on buy now, pay later services for grocery purchases, with about 35% of those users missing payments and incurring fees or penalties. A survey from LendingTree indicated that 29% of buy now, pay later users have purchased groceries through these services, nearly double the proportion from two years earlier.
Over the past five years, food-at-home prices have risen approximately 25%, creating cumulative pressure on household budgets. Experts note this sustained financial strain is leading to increased debt burdens that are difficult to repay. While lower and moderate-income households face greater repayment challenges compared with higher-income households, the research found that affordability pressures are widespread, affecting consumers across various income levels. Researchers cautioned that while credit access serves as a critical lifeline for families, reliance on debt instruments can ultimately create future financial instability.
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