Food prices skyrocket

Learn how to stretch your shopping budget just a little bit further
April 24, 2008 9:14:51 AM PDT
Mary Pea and her husband have always watched prices on their trips to the supermarket. But now when the couple go shopping in San Jose, Calif., they are buying fewer of the things they like in order to stay within their budget. "We no longer purchase things like wild fresh fish, organic produce or dairy, or deli items," Pea said. "We stick to the perimeter of the store, as always, but stay away from some of the better quality or so-called luxury items."

And they are not alone. As the price of just about every food product soars, Americans everywhere are looking for ways to cut their grocery bills.

Pea said that she and her husband used to cook fish three times a week. But now they only buy it when it is on sale -- once every 10 days or so.

"And then even sometimes the sale price is too high," she said.

The couple has added more beef and chicken to their diet instead. "Even those prices are going up but they are not as high as fish," Pea said.

They also cut organic produce and organic milk from the shopping cart.

"My husband isn't terribly fond of leftovers, but we do leftovers," Pea said.

"There's no throwing anything out if it can at all be avoided."

In the past year and a half, consumers across the country have seen the prices at grocery stores spike, said Ephraim Leibtag, an economist with the U.S. Department of Agriculture's Economic Research Service.

In the past two decades food prices have only increased by an average of 2.5 percent each year, Leibtag said. But from 2006 to 2007, prices spiked 4 percent. And this year they show no sign of easing. The Department of Agriculture is forecasting a 4-5 percent increase in retail prices this year.

The cost of white bread alone was 16.3 percent higher in March than at the same time last year, according to the Labor Department's Bureau of Labor Statistics, which tracks inflation through the Consumer Price Index.

Grade A large eggs were up nearly 35 percent during the same period and sliced bacon was up 4.6 percent.

So Why are Prices Higher?

There are a number of factors causing this run-up in food prices.

First, there is more money in a lot of developing countries. The upshot is that people can afford to eat more and also to eat foods they traditionally have not consumed, such as meat. So these countries then need more corn to feed their cattle, which drives up demand for the grain.

Also, the world's population is growing faster than the growth in food production.

Poor weather in some parts of the United States have also contributed to the run-up. Think floods and early frosts.

With oil and gas prices at all-time highs, it costs more to transport foods to your grocery store. That cost is now being passed on to consumers.

Some countries are also dipping into their stockpiles of food, causing greater pressures on the market.

Finally, there is ethanol: As more corn has been used for fuel, there is less available for food. Also, with corn at high prices, many farmers this year decided to plant corn instead of wheat or soybeans, reducing supply and subsequently pushing up prices of the latter two.

And that ripples through all food prices.

Think about that slice of pizza that you had last week. Because demand for wheat is high, flour costs are higher and the local pizza shop now must spend more to make a slice for you.

Professor Mike Dicks, an agriculture economist at Oklahoma State University, said that such rises in food prices come in cycles. He said this spike is "almost identical" to one seen from 1973 to 1983.

He said that the country used to have excess farm capacity to deal with shortfalls like we are going through now. But in 1995, many farm subsidies were eliminated, which he said caused many farmers to get rid of their excess land.

Dicks said it could take two to three years for supply to increase enough to lower prices.

So what can you do in the meantime to trim your grocery bill?

Tips to Save

  • Buy dried instead of canned grains and beans because they're generally cheaper. With cans, you're paying for water.
  • Eat seasonally. It's healthy, supports local growers and vegetables and fruits in season are far less expensive.
  • Supplement your fresh produce with inexpensive frozen vegetables.
  • Buy generic store brands whenever they're cheaper but just as tasty.
  • Check unit prices. Giant packages are not necessarily cheaper than many smaller ones.
  • On weeks that you buy less expensive proteins, or have protein left over from the week before, stock up on staples.
  • Try making breakfast out of leftover grains or make muffins from scratch rather than buying boxed cereal, which is expensive.
  • Other cheap proteins: Edamame soy beans, canned fish, peanut butter.
  • Use every bit of the item. For example: Make chicken stock out of chicken bones or sauté the greens from turnips.
  • Clip and use paper and online coupons. Find stores that offer double coupon credit.
  • If you are a tea drinker, try buying just bulk black and green teas, then adding your own spices to them for variety.
Foods that have increased in price:
  • Sliced bacon rose from $3.46 a pound last March to $3.62 a pound this March, an increase of 4.6 percent.
  • The price of chocolate chip cookies has increased 2.1 percent in the past year.
  • Grade A large eggs have shot up an astonishing 34.8 percent.
  • The price of all-purpose flour has gone up 37 percent in just one year.
  • A gallon of whole milk has gone from $3.07 to $3.78, a 23-percent jump.
  • Tomatoes have gone up more than 18 percent.
  • White bread has gone up 16.3 percent.
  • Whole fresh chicken prices have gone up by 9.8 percent.
  • Ground beef prices have increased 5.6 percent.
  • White, long-grain rice has seen a 6.6-percent price increase.
  • Red delicious apples have gone up 13.2 percent.
  • Bananas have seen a 17.1 percent price increase.
  • Ice cream has gone up 3.2 percent.
  • The price of a 2-liter bottle of cola has gone up 12.3 percent.
  • Potatoes have seen a 4.6 percent increase.
  • The price of wine has spiked 6.2 percent.


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