Sunday, January 29, 2012

Reality Check on Grocery Costs

In early January I put up a post Grocery Costs at Casa Anglachel, talking about my shopping habits and spending in 2011. A few days ago, an article was posted in the local paper, the Union-Tribune, about restaurant menu prices going up. The article included a table on wholesale food cost increases, courtesy of the Bureau of Labor.

Looks like I have managed to miss most inflation, probably because of the kinds of food we buy. From the article:
According to the Bureau of Labor Statistics’ most recent numbers, wholesale food prices were up 6.1 percent in December compared with a year earlier — the highest increase since 2007. Some of the more notable increases were in beef and veal, which soared 16.1 percent; dairy, which rose 12 percent; and pasta products, 19.3 percent. ...
“The consensus is we’re in an era of high, volatile and rising food costs, and it’s pretty unlikely we’re going to see a big drop-off in any of the major categories that are so critical for operators, like proteins, dairy and grains,” said industry analyst Bob Goldin of Technomic, a research and consulting firm. “Operators are highly reluctant to raise menu prices in this kind of economic climate, but they’re doing so out of economic necessity.”
These price increases are at a wholesale level and the types of food purchased at restaurants are not the same as what gets purchased by grocery stores (you're not going to find "Prime" beef at Ralph's), but there is no reason to believe that food inflation and the categories where prices are rising are not also affecting the grocery stories.

Wholesale food cost changes

Food categoriesChange from Dec. 2010
Wholesale foods6.1
Fruits and melons-12.9
Beef and veal16.1
Processed chickens5.7
Processed turkeys9.6
Dairy products12.0
Roasted coffee13.3
Shortening and oils16.3
Source: Bureau of Labor Statistics
Pasta costs more because of the wheat shortage of last year driven by the fires and drought in various areas of the world. Meat's going up because the meat industry relies on the oil industry and those prices are going up, from fertilizers for feed to having to drive delivery trucks to deliver perishable goods. I know dairy and meat are up for me for the year. Vegetables remain a decent buy, though quality varies more than price. I can usually count on getting 4 bunches of radishes for a $1 at my produce store, but they can range from fantastic to not worth buying.

If restaurants are convinced that prices are going up and staying up such that they must raise menu prices, then food costs are up for us all. This will hit and hurt more the lower your household income is combined with how many mouths you're feeding.

Ordinary families are seeing their non-discretionary food costs go up at a time when their incomes are stagnant or falling. The people who caused the economic mess are not affected by this. They always have plenty of dollars to spend on the best quality food (cook in, eat out). This is a concrete fact OWS should be using.


1 comment:

Jayhawk said...

Well, I think the difference between the wholesale industry in which restaraunts buy and the retail market in which you and I do our grocery shopping deserves more than a passing mention. I read the Union-Tribune article too, and comparing that to my meal shopping trip is like comparing sales trends of Boeing and Ford Motor Company.

Unfortunately, Manchester's rag is my local paper too, but that's a different subject.