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Cost Concerns

Food prices highest since ’08

March 27, 2011
By MIKE ZUMMO, The Leader-Herald

Food prices are on the rise again, and area grocery stores are trying to find ways to offset that cost while still offering value to customers.

"We have definitely noticed the increase," said Matt Paul, a spokesman for Hannaford, which has stores in the towns of Johnstown and Amsterdam. "With the worldwide oil prices, commodities are on the rise. It's just there are increased costs at every point along the chain."

Food costs increased 0.6 percent, the most since September 2008. Food costs rose for almost all major grocery store groups, including meat and eggs, dairy, and fruits and vegetables. The cost of cereals and baked goods was flat. It was the only group that didn't increase.

Article Photos

Gloversville Price Chopper manager Tim Frasier places cans of coffee on the shelf at the store Friday. The price of coffee has gone up recently. Price Chopper and other stores are trying to find ways to offset the rising costs of coffee and other food.

The Leader-Herald/Bill Trojan

According to information provided by Mona Golub, a spokeswoman for Price Chopper, which has stores in Gloversville, Johnstown, Amsterdam and Palatine Bridge, the commodity price for corn has increased by 81 percent from last year, while coffee has spiked by 114 percent. Milk and cheddar cheese commodity prices have increased by more than 50 percent since last year.

Kellogg, which makes Frosted Flakes and Pop Tarts, plans to increase prices on some products to offset costlier ingredients. Kellogg is responding to soaring costs for commodities including wheat, corn, sugar, cotton, beef and pork.

Shortages in corn, soybean and wheat stocks have pushed prices to their highest levels this decade. Corn and soybeans are used for food products, animal feed and in biofuels production, while wheat is the principal ingredient in breads and cereal.

Since mid-2010, corn futures prices have more than doubled to more than $7 per bushel and could exceed the $7.65 record set in 2008, according to Corrinne Alexander, an agricultural economist from the University of Purdue. Soybean prices are up 40 percent from one year ago, to just over $13 a bushel. Wheat futures have risen more than 50 percent since this past July, to $7.75 per bushel.

The oil market also is affecting food prices as recent political unrest in Egypt and Libya have sent oil prices rising to more than $100 a barrel. Oil prices rose last week in the United States as demand continues to increase.

Weather also has been a factor in rising food prices.

Drought hurt Russia's 2010 wheat crop, leading to a ban on wheat exports, and freezing temperatures cut into Mexico's production of tomatoes and bell peppers.

However, area grocery stores have been trying to find ways around the price increases by finding ways to keep prices low and to offer store brands at a lower cost than the national brands.

According to Golub, Price Chopper tries to keep prices low by offering meats in larger "value packs," buy-one, get-one-free promotions and doubling or tripling manufacturers' coupons on various occasions.

The highest food-price inflation was 7.5 percent in September 2008 before dropping 10.5 percent by November 2009. Now, prices are at their highest since September 2008.

"Unfortunately, for the past couple of years, you've been seeing an uptick," Paul said. "Recently, with things going on in the world, we've been getting more of a spike between the Middle East and Japan and everything driving energy costs up. It hits everybody at every turn, unfortunately."

Information from The Associated Press was used in this story. Mike Zummo is the Leader-Herald's business editor and can be reached at business@leaderherald.com.

 
 

 

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