Like most Helenans, Jaunita Brewer has felt the pinch of a marked increase in grocery prices over the past two years.
"It seems like it's doubled," she said this week after purchasing a cartful at Van's Thriftway. "What you used to come in and buy for $40 it seems like is now $80 if you don't make any changes."
So, Brewer, a mother of two teenagers, has made some changes.
"The kids used to get snacks, and now we don't get snacks anymore," she said. "We shop around, watch for sales, buy store brands. We used to eat more fruits and vegetables. You try not to cut those too much, but we have cut some."
Brewer also said hunting season was more eagerly anticipated than usual this year -- a chance to fill the freezer with protein without paying retail prices.
After falling in real terms for nearly three decades, the cost of groceries in the U.S. and around the world has soared over the last 24 months. But there are signs that relief may be on the horizon.
In national consumer price data released this week, prices across the economy fell on the whole at a steeper rate than has ever been seen. One notable exception was food, the cost of which crept up .3 percent in October, continuing its two-year run of unprecedented growth.
Experts say it takes a while for food prices to reflect lower costs throughout the production process. So while oil today is selling for barely more than a third of what it cost this summer, that effect won't be immediately seen at the grocery store.
"A lot of the food that's now landing on the shelves was produced (several months ago) during that high-cost period for energy," said Scott Rickard, director of the Center for Applied Economic Research at MSU-Billings.
Paula Vander Jagt, owner of Van's Thriftway, said prices don't change in either direction overnight.
"The whole system of the food chain, from the producer to the wholesaler to the retailer to the customer, it just takes a while for it to trickle down," she said.
Vander Jagt said she typically uses a formula to determine the prices on her shelves, looking to lock in a certain profit margin on most items. (The grocery business has notoriously narrow margins.) Her wholesaler helps her keep track of competitors' prices to make sure she's in the ballpark.
"We would do a price change as soon as we would receive it," she said.
There is some hope on the horizon for easing of grocery costs. Vander Jagt said her bakery department recently reported a drop in the cost of flour, a key ingredient in items on several aisles of the store, and one that's seen remarkable price increases in the previous 24 months.
Further up the production chain, farmers are getting less than half of what they were a year ago for a bushel of wheat, which, combined with still-high input costs, is putting growers in a squeeze, one state expert said.
Lola Raska, vice president of the Montana Grain Growers Association in Great Falls, said that while the dropping cost of fuel has provided some relief, fertilizer and some chemicals remain too expensive.
"There is some indication that those prices are starting to drop," she said. "Some of those decreases have reached the producer, but not all."
Rickard also noted that development in much of the rest of the world can drive up food prices in the U.S.
"As incomes increase, the quality of the proteins you want to eat increases," he said. "We now face more competition for food, both in total population and in the percentage of the population we would consider middle class. And the smaller a fraction of the world's total demand that we are, the more competition we are going to see."
Rickard said it's challenging to pin food costs to any one element of production, including the price of energy. For years he tracked a market basket of consumer goods in Eastern Montana and Wyoming, and was never able to find a correlation between food prices and the broader basket of goods.
"There's a very complex relationship between energy use and food production," he said.
Not everyone is altering their buying patterns. Helena shopper Bill Haberman said he's still buying the same groceries.
"I don't pay too much attention to it," he said. "It is what it is."
While there is a certain inelasticity to food consumption -- people do, after all, have to eat -- there are ways to trim the grocery budget while still filling the shopping cart. People may eat out less, or eat more fast food and fewer meals at sit-down restaurants.
There are ways to trim pennies in the supermarket as well, but Vander Jagt said she hasn't seen Helenans shying away from prime cuts of meat or cutting other corners, with one recent exception.
"Western Family (the store-brand alternative to brand-name products) has always done really well, but we just had a case lot sale in October, which happened when all the bad economic news was coming out, and that was the biggest case lot sale we've ever had," she said.
But by and large, she said her receipts show Helena continues to weather the economic downturn. A recent drive for Food Share was hugely successful, a sign that Helenans still feel they have enough to share some extra with those who need it.
"Locally I have been very encourged," she said. "If it were bad, people would still have to eat, but they would be buying the cheapest of everything, and I have not seen that."
Turkey dinner national average
By one seasonal measure, in one local supermarket, Helena's food prices are more or less in line with the rest of the country.
Each year the American Farm Bureau Federation calculates the cost of a classic Thanksgiving dinner. A stroll through the North Montana Albertson's late this week showed that most local prices are close to what the AFBF calculates the average American family is paying for its feast this year:
- 16-pound turkey: $19.09 nationally; $25.44 here (based on $1.59 per pound).
- Cube stuffing, 14 oz.: $2.57 nationally, $2.50 here.
- Pumpkin pie mix, 30 oz.: $2.34 nationally, $2.19 here.
- Pie shells (2): $2.26 nationally, $2.00 here.
- Sweet potatoes, 3 lbs.: $3.12 nationally, $2.97 here.
- 12 rolls: $2.20 nationally, $1.99 here.
- Green peas, 1 lb.: $1.58 nationally, $2.00 here.
- Gallon whole milk: $3.88 nationally, $3.99 here.
- Fresh cranberries, 12 oz.: $2.46 nationally, $1.99 here.
- Half-pint cream: $1.70 nationally, $1.00 here.
(Note the Farm Bureau study also includes a one-pound carrot/celery tray and $2.69 for "miscellaneous ingredients.")
Reporter John Harrington: 447-4080 or john.harrington@helenair.com.
Posted in Local on Sunday, November 23, 2008 12:00 am
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