No Sign Of A Near Term Drop In Retail Food Price Inflation

Articles
December 22, 2011

No Sign Of A Near Term Drop In Retail Food Price Inflation

With wholesale price advances still exceeding those at the retail level, The Food Institute's Price Tracker projects retail food prices will remain well above prior-year levels into early 2012 as some food retailers pass along those increases.

With wholesale price advances still exceeding those at the retail level, The Food Institute’s Price Tracker projects retail food prices will remain well above prior-year levels into early 2012 as some food retailers pass along those increases. It is likely that retail price inflation will ease somewhat in late spring to early summer however in 2012. It was spring of 2011 when retail prices started escalating. The run-up in prices at that time was the result of retailers passing on some cost increases they had been experiencing at wholesale for the prior 18 months or so. And a recent report from Citigroup notes that retailers they surveyed were split between increasing and decreasing basket prices.

“For the foreseeable future it looks like the price increases retailers are have encountered in stocking their shelves will outweigh the increases they are passing along to consumers,” notes The Food Institute’s President, Brian Todd.

Competition does remain fierce however as Wal-Mart continues to be extremely competitive in the marketplace. Citigroup even noted hat for the first time in their recent survey comparing market basket prices among food retailers that Wal-Mart’s prices were lower than those at Target, even when accounting for the 5% discount offered to shoppers using Target’s credit card.

Price competition will likely remain intense into early 2012 as grocers are very concerned about mainitaining market share.

During November, prices for food-at-home declined for the first time in a year, as reflected by the Bureau of Labor Statistics’ Consumer Price Index, dropping four-tenths of a percent from October. Nonetheless prices are still almost 6% more than they were a year ago.

The Food Institute notes that only four of the major food categories it tracks posted price increases during the month of November compared to October, with sugars and sweets posting a significant 1.7% decline, followed by processed fruits and vegetables dropping 1.2%.

But when compared from a year earlier, prices in all of the categories were up, ranging from a 3% increase for poultry to a 17% jump in prices for coffee, and an overall 5.9% advance in prices for the entire retail food, or food-at-home category.

For more on what is happening to food princes and other industry, turn to the Food Institute Report at www.foodinstitute.com.