Not All Doom And Gloom

There seems to be some good news out there.

From the Escanaba Daily Press

"Food prices starting to drop
By Dionna Harris
POSTED: September 23, 2009

ESCANABA - The impact of lower fuel and transportation costs are being seen not only at the gas pump, but also on supermarket shelves.

When gas prices hit $4 per gallon or more and oil was $140 per barrel in 2008, food makers passed along increases to grocers. Grocers, in turn, passed them on to consumers.

Retailers now dealing with stagnant incomes, unemployment and economic uncertainty have dropped prices on dairy, fruits, vegetables, and bread, according to Associated Press reports.

Rick Kobasic, of Sav-More IGA in Escanaba, said he has seen milk and other dairy prices drop. The reduction in prices have been passed on to consumers.

"Last year at this time, milk was selling for nearly $4 per gallon, now the price is down about 20 percent," said Kobasic.

Kobasic also said cheese was down, along with eggs. He did say there were no noticeable changes in prices in some areas.

"There have been some changes in prices with reductions being seen in poultry and some meats; soft drinks and alcoholic beverages remain unchanged," said Kobasic.

He also said there had been no change in the prices charged per loaf of bread. Rod Stende, general manager at Elmer's County Market, said price reductions generally take longer to be realized for processed foods.

"The price reductions in processed foods come directly from the supplier, if they pay less for the items, then we pay less and pass on the savings to our customers. However, the opposite holds true as well," said Stende.

Stende said some manufacturers are quick to raise prices and slower to lower them, while commodities such as cheese, butter and milk most often reflected current market prices.

Some processed food producers raised prices and reduced package sizes to protect profits.

A Labor Department price index of food sold to be eaten at home fell for the seventh time in eight months in July. The index, which is part of the Consumer Price Index, fell 0.5 percent in the most recent month and is down 0.9 percent in the past 12 months.

In fact, overall food prices - what's sold in groceries and in restaurants - haven't risen on a monthly basis since November 2008.

Still, that doesn't make up for the surge in food prices from last year, when costs for ingredients like wheat and corn and fuel costs for transportation soared to record highs. Food makers raised their prices and some even shrank package sizes to protect their profits. CPI's food-at-home index finished last year up 6.7 percent, so the less than 1 percent drop so far this year doesn't erase that.

But ingredient costs for major food makers, including Heinz, Kraft and Hormel, are down about 28 percent on average as of Sept. 1, from the same time last year, according to Jonathan Feeney, food analyst for Janney Montgomery Scott.

That means the food industry now has room to give back some of those price hikes - and feed the frugal consumer who is using more coupons, buying more store brands and switching to discounters to stretch a budget.

Consumers' demand to save money is pressuring retailers and manufacturers to cut everyday prices and boost promotions throughout their stores.

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The Associated Press contributed to this report" Food prices starting to drop - DailyPress.net | News, Sports, Jobs, Escanaba Information | The Daily Press