Recent Changes in the Cost of Groceries in Georgia

Post-Covid inflation has moderated significantly. Nevertheless, many students continue to report that inflation places considerable strain on their finances. While groceries account for approximately 14.7 percent of average household total expenditures, they represent 30 to 54 percent for college students. To address this issue, we construct a grocery-specific cost of living index, referred to as the Cost of Groceries, and compare it with the overall Consumer Price Index.

The Cost of Groceries is based on a basket of 26 commonly purchased items, including ground beef, milk, eggs, bread, coffee, and soft drinks. Price data and spending weights are obtained from the Council for Community and Economic Research (C2ER). In general, a cost-of-living index reflects the total expenditure required to purchase a given basket of goods. It rises either because prices increase and/or because quantities purchased increase. To isolate the pure price effect, changes in quantities must be excluded.

A standard approach to eliminating the quantity effect is to fix quantities at their base-year levels. However, because the C2ER weights vary from year to year, we adopt a compensating variation assumption that allows changes in weights while maintaining satisfaction. We find that the Cost of Groceries in Georgia increased substantially, rising by 10.9 to 24.3 percent in 2023 and by 8.6 to 12.2 percent in 2025. These increases are three to four times larger than the growth in the overall cost of living. This differential helps explain why college students continue to experience financial stress despite the broader moderation in inflation.