Why you're paying more at the grocery store
Food costs rose by 4 percent last year, and the Department of Agriculture predicts they'll rise by as much as 4.5 percent this year.
Seattle Times staff reporter
When the cost of food climbs at a gradual pace it's easy to eyeball a shopping cart and estimate the cost of the groceries inside.
Not anymore. Food costs rose by 4 percent in 2007, and the U.S. Department of Agriculture predicts they'll rise by as much as 4.5 percent this year -- the highest food-price inflation since the early 1990s.
Elizabeth Peck, of Edmonds, says her family of four spends about $700 per month for groceries, up $100 from this time last year, despite shopping three stores (QFC, Trader Joe's and Grocery Outlet) to capitalize on the best deals offered at each.
She pondered the contents of her cart in the checkout line of one local supermarket on a recent afternoon. It was filled with such items as a whole fryer chicken (cheaper than chicken breast), prepackaged lunch meat (cheaper than the deli) and avocados on special.
"I bet you that's at least $100," said Peck, 32, who is raising two young daughters and has a third on the way with husband Kurt, a technical analyst at a downtown Seattle engineering firm. When the total exceeds $130, she vows to try harder next time.
"I feel like food is my No. 1 budgeting issue for my family. It's definitely the highest expense next to my mortgage each month, so it's a challenge."
Shoppers around the globe are sharing her experience in yet another example of our growing interconnectedness. From Beijing to Bellevue, Edinburgh to Everett, we're devoting more of our incomes toward food.
Number of factors
The fact that food prices are fluctuating is normal. Every society has, at times, grappled with droughts that prompt price increases or bumper crops that send prices plummeting.
What's unusual this time is the number of factors involved, economists say:
• Rising fuel prices make it more expensive to grow, harvest, transport and package food.
• Greater demand for bread and meat within the booming economies of China and India means a greater share of grain harvests heading east to be ground into flour or fed to livestock.
• A growing desire for fuel produced from corn has shifted farmland from feeding people to filling gas tanks.
• Droughts in Australia and Russia have further crippled an already dwindling grain harvest.
But the principle of supply and demand (higher demand + less supply = higher prices) alone does not explain the situation, said Hendrik Wolff, an assistant professor of economics at the University of Washington. Speculators who try to predict trends such as how much coffee Chinese workers will sip by 2010, or the amount of grain bakeries will buy come fall, increasingly factor into the equation, as their influence affects prices.
"Just as exchange rates go dramatically up or down on the stock market, there's a similar phenomenon with food commodities," Wolff said. "If some leading expert in the industry thinks prices will go up or down, others may follow him."
For Aimee Sheridan, a single mother of four in Lake Forest Park, the sum of all those factors is less variety on her dinner table. She switched from delivery to take-and-bake for her family's special Friday pizza nights about six months back. That was when she realized she was spending a small fortune just on the nearly six gallons of milk that her three sons, daughter and their visiting teenage friend drink each week.
With food prices still climbing, she's had to eliminate pizza night altogether, along with takeout food another night each week. Her kids skipped skiing and movies this winter. To save more, Sheridan walks through the house turning off lights, and she arranges car pools whenever possible. Dinners are a rotation of affordable, quick-to-cook standards: Grilled chicken, tacos, spaghetti, chili.
"It's the eating-out part now that we've really cut back on, not necessarily because it's gotten more expensive. It's just that the grocery bill has gotten more expensive."
"Long term, who knows?" said Sheridan, 39, director of development for the Boys & Girls Clubs of King County and an Albertsons and Costco shopper. "We might have to plan meals based on what's on sale in the store."
Americans on average still spend a smaller portion of income on food than people in nearly any other country in the world, despite these recent increases. Should prices continue to rise in the coming years, however, it could significantly shift in how we spend our money.
As a nation we have spent less than 15 percent of our disposable personal incomes on food on average since 1966, and less than 10 percent on food this entire decade, based on the latest figures from the U.S. Department of Agriculture.
In 2006, Americans devoted about 7.2 percent of our budgets to food consumed at home, versus 9.3 percent in Canada and 24.5 percent in Mexico.
Food has grown increasingly affordable over the decades as farmers and retailers alike grow more efficient and supermarkets and discount-warehouse stores compete for customers, said Bill Greer, a spokesman with the Food Marketing Institute, an industry group.
In the past when times were tough, consumers have switched from beef to less-expensive chicken, clipped more coupons and compared prices more carefully from store to store and even product to product, Greer said. So far, the industry is noticing the latter two habits, along with shoppers making trips to different stores in search of bargains rather than relying on one-stop shopping.
"One interesting thing that's really an unknown at this point is you have people who are 46 and younger and they really never experienced food inflation before. We've had such a long stretch of time with really no food inflation. It's hard to predict how this group is going to react," Greer said.
For some, price remains no object when it comes to food. But for everyone else, particularly lower- or fixed-income shoppers and families with growing kids, rising prices have meant changes.
Peck, the Edmonds mother, bargain shops for granola bars and other treats when it's her turn to bring snacks to her daughters' classes. She thinks harder about the cost of what she'll volunteer to bring to the rising number of potlucks friends are throwing to cut party costs. She's disappointed that she can't afford to buy organic milk and produce as often anymore.
Rarely does she put produce back due to cost. But three months ago, she passed on grapes after the produce scale showed the package would cost about $9.
What's to come
The United Nations' Food and Agriculture Organization predicts higher prices for the coming decade, and that has prompted much debate among world leaders about the best use of the globe's farmland. Shifting acres to biofuel production eases our environmental impact. But anti-hunger groups wonder whether that's prudent use of land that could have yielded something edible.
Bread and other staples cost so much in nations such as Egypt and Haiti that the United Nations has called upon richer countries to help immediately, to discourage rioting and violence and quell hunger. An unstable food supply, they say, could destabilize already shaky governments.
Here at home, bakers wonder whether we should ship so much wheat overseas when local prices have skyrocketed.
Leaders of the West Seattle Food Bank say they're seeing dozens of new faces and have had to buy food to supplement dwindling donations. The parking lots at bakery outlet stores keep getting busier.
When we're busy tightening our own belts, Sheridan said, it's harder to remember that someone always has it tougher.
"I always worry that people get pretty panicked about that and forget that we're still a community, and we still need to take care of each other."
Karen Gaudette: 206-515-5618 or firstname.lastname@example.org
Copyright © 2008 The Seattle Times Company
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