Rising Food Prices Take a Bite Out of Food Stamp Benefits
by Kenneth Hanson and Margaret Andrews
Economic Information Bulletin No. (EIB-41) 21 pp, December 2008
Cover image for ERS report "Rising Food Prices Take a Bite Out of Food Stamp Benefits " (EIB-41) The Food Stamp Program is designed to provide low-income families with increased food purchasing power to obtain a nutritionally adequate diet. As in most other Federal Government assistance programs, benefits are adjusted in response to rising prices—in this case, rising food prices. The current method of adjustment results in a shortfall between the maximum food stamp benefit and the cost of a nutritionally adequate diet as specified by USDA’s Thrifty Food Plan. During fiscal year (FY) 2007, the shortfall in the caseload-weighted maximum benefit for the program grew from $7 in October 2006 to $19 in September 2007. In FY 2008, the amount grew from almost $8 in October 2007 to $34 in July 2008 and to $38 in September 2008. In an average month, food stamp households faced shortfalls of over $2 in FY 2003, $12 in FY 2007, and $22 in FY 2008. These losses in food purchasing power account for 1 percent, 4 percent, and 7 percent of the maximum benefit in each respective year. Alternative adjustment methods can reduce the shortfall but will raise program costs.
Keywords: Rising food prices, food price inflation, food stamp benefits, Supplemental Nutrition Assistance Program, Food Stamp Program, food purchasing power, cost of the Thrifty Food Plan
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