Food Prices Skyrocket; How to Save at the Market
Learn how to stretch your shopping budget just a little bit further.
April 24, 2008— -- 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.
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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.
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.
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.
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?
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