I agree with what others have said that while the amount may seem low, a little over $200 a month is definitely doable for groceries. I live in an area of Illinois that is part suburbs/part farmland. You drive past a subdivision of $500K townhomes behind a large piece of farm equipment. It's a bit of a paradox, and our grocery prices definitely reflect it.
For my family of 6, I spend roughly $300 per month on groceries. This includes formula for my 6 month old. It is definitely doable, but it seems impossible because of all the hoop-jumping you have to do if you aren't used to eating "this way."
I do not
shop circulars. I may glance at them once, to see if there are any phenomenal deals, but I will never rely on them for making my list. There is a whole host of psychology that goes into flier circulation. For example, you're more likely to "stock up" on milk if it's cheap. You're also more likely to purchase cookies, cereal and other things that go with the milk. Companies know this
and use it against you. These deals involve products that compel consumers to buy the high-margin junk food. The deals on healthy foods (unadvertised sales of strawberries for $1 per package) are not usually found in circulars, unless accompanying junk food is on sale.
Of course, the usual solution is to make a strict list and stick to it. But lists leave no room for adjustments. You can't snatch up the great deal on whole chickens if it's not on your list. Otherwise, you begin looking at all the other "good deals" and you're right back at the marketing psychology.
So, here's what I do. I've shopped at every store in my area (and there are a lot of them). Most, like Jewel, Meijer and Domick's have roughly the same prices and those are higher than everyone else. The local grocer has good deals, but their quality is terrible. 30 minutes away, I discovered a great little grocer who has AMAZING prices and AMAZING quality AND a "discounted" section for old/bruised/imperfect produce.
Now that I know where is usually good, I develop a sense of how much I'm willing to pay. I will not pay more than $.79 per pound for grapes. They're usually $1.50 to $2.00 per pound, so they usually aren't on the menu. Squash? Never more than $.50 per pound. Whole chickens? $.60 per pound. Cheese? $3 per pound. Cold cereal? $.10 per ounce. This is a quick metric that lets me decide if I should buy something or shouldn't.
Staples are purchased in such copious quantities that I don't need to buy them more than once every three or four months. I just bought a 25 pound bag of Jasmine rice (for $15 at Sam's Club). That will last us for at least three months, but probably four or five. Same with flour, sugar, oatmeal and other raw goods. I wait until a good sale and buy a huge amount. If you have freezer space, use this for frozen vegetables! From time to time, Meijer puts their frozen veggies on super-special: 4 bags for $1. Frozen broccoli, carrots, potatoes, onions, peas, beans, brussel sprouts...they're all just as good as fresh and cost far less.
If the label contains the words "hydrogenized," "high fructose," "hydrolyzed" or "aspartame/sucralose" (NutraSweet/Splenda), I do not buy it. Ever. It's not food. It's chemistry pretending to be food. Lunch meat? Don't buy it. Juice? Don't buy it. Baking mixes? Nope. Chicken breasts/pork chops? Very very rarely buy it - it has to be 75% off the regular price, otherwise I buy the whole chicken/pork loin.
Most of all, you need - NEED - to learn to be inventive with food. I had a box of Japanese curry (uses potatoes, carrots, onion, celery and 2 pounds of pork/chicken). I had no pork or potatoes. I dropped those and used lentils. It required that I change the preparation to prevent squishy lentils, but it worked. I've made cookies with whole wheat flour and bread with oatmeal I turned into flour in my coffee maker.
OK, I'm done rambling now...