The Wall Street Journal reported Friday that consumers cut food spending sharply in the 4th quarter of 2008. “Spending on food fell at an inflation-adjusted 3.7 percent from the third quarter, according to data from the Commerce Department's Bureau of Economic Analysis.” This is the biggest drop since the government has kept records.

Speculation is that the drop in spending comes from two things. The first is that people are trading down from brand names to private labels (what we used to call generic brands) or they are buying less-expensive alternatives like chicken instead of beef. The second reason is that people have been more willing to eat what they already have. They’ve been looking in their pantries and seeing what’s there instead of going out and buying new.

The discretionary income that many people have had for so long is dwindling, and with that more expensive food is being by-passed for better bargains.

A graph on the WSJ site shows that while sales of eggs, fresh vegetables and milk have risen slightly recently, other food sales have fallen:

  • Poultry -3.2%
  • Beef, veal -3.4%
  • Cereals -4.3%
  • Sugar, sweets -5.1%
  • Pet food -5.1%
  •  Alcoholic beverages -10.9%
Restaurants are also feeling the pinch, except the fast food restaurants, that is. McDonald’s reported a 7.1 percent increase in January.

So what about you? Are you cutting back your grocery budget? Are you buying store brands/private labels over name brands? Have trips to through the fast-food drive-thru replaced meals in better restaurants?

As for my family, our grocery budget has decreased. We’ve opted, at least for now, to focus on wasting less food while keeping the quality of our food the same. In the past year, we had already cut our meat consumption down, and that has helped us be able to continue to buy other quality food. And while we haven’t been to a fast food restaurant in over a year, our restaurant visits have gotten less frequent. We’re opting to cook more at home.  

Image: ninjapoodles

Robin Shreeves ( @rshreeves ) focuses on food from a family perspective from her home base in New Jersey.

Food spending down sharply
Spending on groceries and meals out dropped sharply at the end of 2008. Have you slashed your food budget?