Amid soaring grocery prices, Americans are reportedly going into debt to purchase food, CNBC reported on the 20th (local time).
According to research by the Urban Institute, a public policy research organization, many American households broke into their savings or used credit cards, buy now, pay later programs, installment plans, and payday loans to cover grocery expenses last year.
Cassandra Martineck, senior researcher at the Urban Institute, said, "Although the rate of price increases is slowing down, American households are still spending more on groceries this year compared to last year," adding, "This means that people have to rely on liquidity resources beyond their income to meet the basic need for food."
CNBC expressed concern that while these payment methods can serve as a lifeline, they can also lead to financial instability.
American consumers have been struggling with rising food prices since 2021. The difficulties have intensified especially as pandemic-era support expired. In March last year, the Supplemental Nutrition Assistance Program (SNAP) for vulnerable groups ended, resulting in a loss of an average monthly benefit of $90 (about 120,000 KRW) per person.
The survey found that about 70% of all grocery purchases were made using credit or debit cards. CNBC pointed out that such payment methods are risky for consumers who cannot pay off their balances in full.
According to the Urban Institute, the average annual interest rate on credit cards last year reached a record high of 22.8%.
Among adults who used credit cards for grocery purchases, 33.4% paid their bills in full, but 20% paid only the minimum amount. Additionally, 7.1% failed to pay even the minimum amount. Furthermore, 37% of adults who used buy now, pay later programs for grocery purchases did not pay on time.
The Urban Institute stated that SNAP and other social safety net support policies could help alleviate these difficulties.
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