A cumulative 32% increase in food costs over the last five years has pushed more than one in four working-age Americans into credit card debt simply to pay for basic groceries, according to new data released Monday by the Urban Institute. The nationwide report highlights mounting financial distress among U.S. households, as persistent inflation forces families past their financial limits at supermarket checkout counters.
Navigating Five Years of Persistent Grocery Inflation
Food costs represent one of the largest recurring expenses in household budgets across the United States. Over the past five years, continuous price surges have transformed everyday grocery shopping into a persistent financial strain for millions of families.
While temporary declines in gas prices recently offered brief inflation relief, cost pressures at the grocery store remain acute. Corporate supply chain bottlenecks, international trade disruptions, and lingering geopolitical shocks continue to keep food prices elevated across regional markets.
Broader economic measures confirm the ongoing pressure on household purchasing power. Recent personal consumption expenditures (PCE) data showed a 0.4% monthly increase, leaving prices up 3.8% year-over-year and straining lower- and middle-income budgets alike.
Surging Credit Usage and Accelerating Delinquency Rates
The Urban Institute study revealed that 63.2% of working-age adults between the ages of 18 and 64 charged grocery purchases to credit cards over the past year. Among those using credit for food, more than 25% reported ongoing struggles to repay their balances.
Financial distress is escalating rapidly among household borrowers. The share of working-age adults failing to make minimum credit card payments on grocery debt climbed from 7.1% in 2023 to 8.7% in 2025.
Alternative financing mechanisms are also gaining widespread traction as families search for short-term liquidity. Approximately 8.9% of working-age adults relied on ‘Buy Now, Pay Later’ (BNPL) installment plans to secure essential food items.
However, point-of-sale financing has proven difficult to manage for financially stretched households. More than a third—34.8%—of consumers who used BNPL services for grocery purchases failed to make a scheduled installment payment on time.
Middle-Class Households Squeezed by Rising Costs
The surge in debt accumulation is hitting middle-income earners with unexpected severity. Households earning between 200% and 400% of the federal poverty level experienced the sharpest increase in credit payment defaults.
For this middle-class demographic, missed minimum credit card payments on grocery purchases jumped from 9.3% in 2023 to 12.3% in 2025. Many of these households earn too much to qualify for public assistance benefits but lack sufficient liquid savings to absorb years of compounding inflation.
Urban Institute researchers warned that relying on short-term debt for nondurable consumer goods creates long-term financial instability. While credit lines offer temporary assistance during cash shortages, compounding interest charges leave households vulnerable if incomes fail to keep pace.
Protracted Inflation Outlook and Expert Forecasts
Economic analysts warn that relief at the grocery checkout line is unlikely to arrive in the near future. Long-term supply chain realignments and structural labor costs continue to keep wholesale food prices elevated.
The Conference Board Chief Economist Dana M. Peterson noted that everyday consumers will likely feel squeezed by store prices for years to come. Peterson forecasted that the Federal Reserve’s target inflation rate of 2% may remain out of reach until at least 2028.
Financial advisors emphasize that high revolving interest rates exacerbate consumer distress. Borrowing money at double-digit annual percentage rates to purchase perishable daily necessities creates a dangerous cycle of debt compounding.
Compounding Economic Risks and What to Watch Next
The rising reliance on credit card debt for essential sustenance points to systemic vulnerabilities in broader consumer spending power. Analysts are closely watching whether elevated default rates will force commercial lenders to tighten credit availability for working-class families.
Key focus areas moving forward include upcoming Consumer Price Index releases and shifting lending standards in retail financial sectors. Industry watchers will evaluate whether expanding BNPL defaults trigger broader credit tightening, and if middle-income default rates continue rising through the remainder of 2025.
