A cumulative 32% increase in grocery prices over the last five years has pushed a growing number of working-age Americans into credit card debt, according to new data from the Urban Institute.
Rising Dependence on Credit and Installment Plans
The Urban Institute’s report, which analyzed a December survey of 7,500 adults ages 18-64, highlights a shift in how households manage essential food expenses. Last year, 63.2% of working-age Americans charged their grocery purchases to credit cards. The data indicates that families are increasingly unable to clear these balances. Kassandra Martinchek, a co-author of the study and a senior research associate at the Urban Institute, noted that while the 1.6 percentage point increase may appear modest, it represents millions of additional Americans struggling to manage basic household needs. In addition to traditional credit cards, reliance on “buy now, pay later” (BNPL) installment plans has become a common survival strategy.
The “K-Shaped” Economic Squeeze
Financial experts and researchers observe that the burden of inflation is not distributed equally, creating a bifurcated or “K-shaped” economy. Lower- and middle-income households are experiencing significantly higher rates of distress compared to their higher-income counterparts. According to the study, 12% of low- and middle-income adults who used credit cards for groceries missed a minimum payment last year, a rate triple that of higher-income consumers. Additionally, lower-earning households were four times as likely to miss a BNPL payment. Roughly 20% of working-age adults reported tapping into long-term savings—including emergency funds not intended for daily expenses—at least once in the past year to pay for groceries. Meanwhile, enrollment in the Supplemental Nutrition Assistance Program (SNAP) has declined by nearly 5 million people over the past year, falling to 37 million as of March, following the introduction of stricter federal work requirements.
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Long-Term Inflation and Household Stability
The path to relief remains uncertain. While recent fluctuations in gas prices have offered temporary shifts in household spending, economists warn that food affordability will remain a persistent concern. The Conference Board Chief Economist Dana M. Peterson indicated that supply chain strains and geopolitical shocks are expected to keep prices elevated, with the Federal Reserve’s 2% inflation goal potentially remaining out of reach until at least 2028. Adding to these pressures, the U.S. Department of Agriculture has projected the weakest wheat harvest since 1972, which analysts warn could further drive up the costs of staples like bread, pasta, and cereals. Mark Zandi, an economist, noted that energy costs—which are expected to remain high for several years—will likely translate into higher costs across the board, including food.
The Impact of Missing Payments
For many families, missing a credit card payment is not just a sign of financial strain but a trigger for further debt. The human cost of this cycle was illustrated by the experience of 72-year-old Laurie Lumbra, a retired teacher. After being forced to rely on credit cards to cover groceries, she eventually fell $10,000 into debt. “It gets very depressing. You feel like you’re just such a failure,” Lumbra said. “I feel like I’m doing everything right and it’s not working.” As households navigate these challenges, experts warn that the reliance on high-interest debt and the erosion of savings could have lasting consequences. “They will still need to pay for their basic needs,” Martinchek said. “Now they have the additional burden of also needing to repay debt—it could constrain their ability to meet their basic needs in the future and get back on their financial feet.”
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