Wholesale Food Price Advances Exceed Retail for 10th Straight Month in March

With wholesale prices coming down from February highs and retail prices continuing their steady upward climb, the gap between the Consumer Price Index for food-at-home and the Producer Price Index for finished consumer foods narrowed significantly during March reports The Food Institute. It is the 10th consecutive month that wholesale price increases exceeded those at retail when compared to a year earlier.

With wholesale prices coming down from February highs and retail prices continuing their steady upward climb, the gap between the Consumer Price Index for food-at-home and the Producer Price Index for finished consumer foods narrowed significantly during March reports The Food Institute. It is the 10th consecutive month that wholesale price increases exceeded those at retail when compared to a year earlier.

The Food Institute notes that obviously retailers are passing along the increases they have been encountering for for past year and a half. Historically, during the past ten years March prices on average were 2.6% above prior-year levels, so the 3.6% advance this year is above average and of course is significantly greater than the 0.7% decline reported in March of 2010.

Making up a good portion of the increase at retail recently has been higher beef and pork prices, which are not likely to move lower in the near future. Indeed, wholesale prices for beef and pork during the first quarter were up 19.1% and 14.5% respectively, while retail prices for beef advanced 10.9% and pork 10%. Fortunately for consumers, poultry prices during the first quarter were up 2.1%, with processed young chicken prices down 5.2% at wholesale.

Several major food retailers are looking to pass along the majority of food inflation. SUPERVALU believes product cost inflation could reach 3% in its fiscal year ending Feb. 24, 2012.

KROGER sees its strong private label offerings helping it control food cost increases, particularly its own manufacturing capability. The chain operates some 40 manufacturing plants.

SAFEWAY sees food inflation as high as 3% this year and expects to be able to pass along most of those price increases.

For a sample copy of the Food Institute Report and for more information, just log on to foodinstitute.com.