Pharos-Tribune

November 6, 2011

Increased prices: USDA predicts food cost jumps

by Denise Massie
Pharos-Tribune

LOGANSPORT — In the coming months, food prices are expected to increase at both restaurants and grocery stores.

According to a recently released food price outlook from the United States Department of Agriculture, the consumer price index for all food is projected to climb 3.5 to 4.5 percent.

Grocery store prices are forecast to increase 4 to 5 percent, while restaurant prices are predicted to rise 3 to 4 percent.

“Although food price inflation was relatively weak for most of 2009 and 2010, cost pressures on wholesale and retail food prices due to higher food commodity and energy prices, along with strengthening global food demand, have pushed inflation projections upward for 2011,” according to the USDA’s website.

At Amelio’s and Ike’s Sports Bar in Logansport, owner Larry Isaacs said passing any increased cost of food to the customer would be his last option.

“That’s something I want to avoid really bad,” he said. “We’ve tried to be smart enough over the last few years to take it at a great level and buy the right product, so if something like this would happen, we can absorb some of it. We’ve become smarter in the food business.”

Trying to think into the future, Isaacs said he’s also tried to make buy food items that can be used for multiple dishes. He offered chicken as an example.

“You also have to shop smart,” he said. “You have to talk to your vendors to see if they will work with you and sell you a better product at a better price.”

Increased food prices have also left D&R Fruit Market in Logansport seeking out the best deals possible.

“We try to shop around and do the best we can to keep the prices at a minimum,” said manager Neil Stewart. “We realize our customers aren’t getting any increases in their pay.”

Stewart said the store’s goal was to hold prices for as long as possible and continue to offer weekly specials to help customers stretch their dollars.

Stewart has not noticed much of a change in the way customers have been shopping.

“We have a steady flow of customers who have been good to us,” he said. “We feel like we’ve been blessed. We try to reward and do the best we can on our end to provide the best value as possible.”

According to the USDA, the all-food consumer price index increased 0.8 percent between 2009 and 2010, the lowest food inflation rate since 1962.

Grocery store prices increased by 0.3 percent, which was the lowest annual increase since 1967.

During that time, cereal and bakery product prices declined 0.8 percent and processed fruit and vegetable prices dropped 1.3 percent.

Restaurant prices increased 1.3 percent in 2010, which was the lowest annual increase for restaurant prices since 1955.

“For 2012, food price inflation is expected to abate from 2011 levels, but is projected to be slightly above the historical average for the past two decades,” the website says.

The all-food consumer price index is predicted to increase 2.5 to 3.5 percent compared to 2011, according to the USDA. Grocery store prices in 2012 are expected to increase 3 to 4 percent, while restaurant prices are predicted to increase 2 to 3 percent.

“While many inflationary pressures that drove prices up in 2011 are not expected to intensify and may even decrease in 2012, retailers have been slow to pass on cost increases to date,” the USDA’s website says. “Price levels in 2012 will hinge significantly on several macroeconomic factors such as weather conditions, fuel prices and the value of the U.S. dollar.”

• Denise Massie is a staff writer at the Pharos-Tribune. She can be reached at 574-732-5151 or denise.massie@pharostribune.com.