Pip: Welcome back to a show about the gap between what things cost and what anyone can explain about why — Tobi McMillan has been doing the explaining, and today the subject is groceries.
Mara: Specifically, what's actually driving prices up, why they're not coming back down, and what shoppers can do about it in the meantime. Let's start with the economics behind that receipt that keeps surprising you.
Why Is Everything Still So Expensive?
Pip: The question on the table is deceptively simple: why does a normal cart of groceries cost so much more than it did five years ago, and why hasn't that changed even though we keep hearing inflation has cooled?
Mara: The post opens with a concrete anchor — food-at-home prices rose 24% between January 2020 and January 2023, and as of late 2025, Americans were paying roughly 29% more for groceries than before the pandemic.
Pip: Twenty-nine percent is not rounding error. That is a structurally different grocery bill, not a bad week at the store.
Mara: And the post traces how that happened by following a single product — eggs — through every step from farm to shelf. Farmers, it turns out, take home less than 18.5 cents of every dollar consumers spend on groceries. Every other step — processing, packaging, transport, distribution, retail — takes a cut on top.
Pip: So by the time the egg reaches your cart, it has passed through six hands, each one adding margin and passing forward any cost increase from the layer below. Blaming any single layer for the final price is a bit like blaming the last domino.
Mara: The post identifies five major forces driving costs across that whole chain: labor, fuel, weather and disease, commodity inputs, and market consolidation. The bird flu case is the sharpest illustration — H5N1 contributed to the loss of more than 139 million birds nationally, and retail egg prices hit $4.95 per dozen in January 2025, up 96% from the prior year.
Pip: A disease with no policy author and no corporate villain produced one of the most dramatic single-category price spikes in recent memory.
Mara: Which leads to what the post calls the stickiness problem. An FMI industry analyst put it plainly: food prices "shoot up like rockets and come down like feathers."
Pip: That asymmetry is the thing most news coverage quietly skips. Inflation cooling to two percent doesn't mean prices fell — it means they're still rising, just more slowly, on top of the 25 to 30 percent already locked in.
Mara: There's a third mechanism the post covers: shrinkflation. Research published in Marketing Science analyzing a decade of retail scanner data found that product downsizing occurred nearly twice as frequently as upsizing — and when measured by total sales, downsizing was more than five times as prevalent as upsizing.
Pip: Smaller box, same price, same shelf, zero headlines. It is a price increase wearing a disguise.
Mara: The consumer psychology piece matters here too. Rather than buying less when a product shrinks, consumers tend to focus on per-unit cost and buy additional units — which means shrinkflation often costs more than an equivalent sticker-price increase would. The post's practical section addresses this directly: unit pricing is the tool that cuts through it. Seventy-eight percent of consumers use unit prices when they're displayed, but they're still not available everywhere.
Pip: The post also walks through store brands, loss leaders, loyalty programs, and seasonal timing — the full toolkit for interacting with the machine more intelligently, which is the post's closing frame.
Mara: The machine isn't going to reset to 2019. Climate risk, disease cycles, energy markets — the post is clear that the structural forces that drove this aren't going away, and prices returning to pre-pandemic levels isn't a realistic near-term expectation.
Pip: So the honest takeaway is: the bill changed for real, structural reasons, and it's staying changed — but understanding the mechanism at least puts you on better footing at the register.
Mara: Unit prices, store brands, timing your shop around sales. Small moves, but they compound. More on the practical side of household economics next time.