Food costs rising impact existing convenience food taxes

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Posted at 5:43 PM, May 11, 2022
and last updated 2022-05-11 18:06:57-04

(LEX 18) — Inflation continues to stay at record highs. It was recently reported that rates only came down slightly in April, from their peak in March. As food prices continue to rise, so do some convenience foods that were already taxed in the bluegrass at a higher rate.

Critchfield Meats Family Market has been impacted by inflation and rising food cost, like most.

One store manager, Jerry Cinnamon, says, "Inflation is hitting everybody out there."

Kentucky has a 6% sales tax on certain food items. Critchfield’s store says they are doing everything they can to keep costs low.

"We get people from all over Kentucky to come in and get our meats - we have for years. They all save up and come in once a month. But I can see where people will not be getting prepared foods because they'll perish quicker," CInnamon said. "And having to stock up on the staples, so that they can make less trips with the price of gas and everything else, that's probably exactly what people are doing."

The tax applies to foods like candy, soft drinks, and prepared foods. Something that grocers like Critchfield’s rely on. Prepared foods include items that are sold hot or heated by the retailer, foods combined or mixed by a retailer, and foods sold with utensils.

Kentucky Retail Association says consumer trends show more people are buying ready-made foods.

The Kentucky Retail Federation’s Director of Communication and Public Affairs, Steve McClain, says, "You pick up on the way home, and you can take it home, make a potato with it at home, and then you've got a meal. So, it's a convenience factor for people."

This is a tax that's been around for years, but as food costs increase, it could impact lower-income shoppers or shoppers in food deserts.

Rising gas costs may prevent people from traveling to the grocery store regularly. Those shoppers might then rely on other retailers, such as convenience stores, that prepare foods within that tax code.

University of Kentucky Professor of Dietetics and Human Nutrition, also a part of the College of Nursing, Dr. Alison Gustafson, explains that food insufficiency is on the rise.

"They're skipping meals, they're reducing foods they would normally buy, they are now shopping at places they maybe wouldn't shop at, and they're buying less food because they have to."

Dr. Gustafson points out that people may turn to more unhealthy options -- which can have long-term health consequences. She believes the change will come from legislation.

"Typically our processed foods that are higher in salt, sugar, and fat, the yummy things, are cheaper than produce," said Dr. Gustafson. "Farmers need to make a profit and they are now losing money, right? So, everyone is involved in this - and so, we need to think of policy approaches for how to help."

Dr. Gustafson explains that current events like the pandemic, the war in Ukraine, and other factors only highlight disparities in the food system.