Federal Foundation Assistance Monitor

Families Caught Short By Food Stamp Inflation Adjustment Lag

Despite sky-rocketing food costs, Food Stamp rules don't allow for immediate adjustments to increase benefits, leaving many poor and needy families in the lurch.

The economic slowdown has coincided with a sharp increase in food prices, which has exacerbated hardship for many low-income families also facing high gas prices (and by the fall and winter, very high home heating bills), according to an analysis by the progressive watchdog group Center on Budget & Policy Priorities (CBPP).  Unfortunately, during periods of rapid food inflation, the Food Stamp Program's current rules do not ensure allow for rapidly increasing benefits, CBPP said. 

Food stamp benefits are adjusted annually for food price inflation, but the adjustment is based on lagged data that are four months old at the beginning of the fiscal year and 15 months out of date by the end of the fiscal year, CBPP said.

The problem comes from the way the program is structured. Food stamp benefits for each fiscal year are based on the cost of the Thrifty Food Plan—the Agriculture Department's (USDA) calculation  of lowest-cost nutritionally adequate diet plan—in June of the prior fiscal year.  However, as food prices have climbed in 2008, food stamp benefits have been inadequate to enable households to purchase the Thrifty Food Plan.  By June 2008, the latest month for which USDA estimates are available, the cost of food had increased 8.5 percent since the previous June, and food stamp benefits were $46 a month below the cost of the Thrifty Food Plan for a family of four.  For example, the maximum food stamp benefit for a family of four was $542 a month, while the USDA calculated that monthly cost of the Thrifty Food Plan stood at $588.30.

Food stamp benefits will be adjusted on October 2008 to reflect food inflation for the June 2007 to June 2008 period.  This increase will be 8.5 percent, a significant adjustment to reflect increased food costs over the June-to-June period.  But when fiscal year 2009 starts this October, food stamp benefits will again already be four months out of date and will grow more out of date as the year progresses, CBPP said.

A simple remedy would be for Congress to anticipate the food price inflation and act to offset some of it so assistance to needy families and elderly individuals does not fall short. For example, until 1996, federal law set food stamp benefit levels for a given fiscal year at 103 percent of the cost of the Thrifty Food Plan in the previous June.  Congress set the benefits at this level to compensate for the lag in data on food prices and thereby to try to ensure that food stamp households would have the resources to secure adequate food over the course of the year, CBPP said.

Info: www.cbpp.org/7-22-08fa.htm

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