Newspaper article The Record (Bergen County, NJ)

Mixed Signals on Food Costs, but Don't Bet They're Falling

Newspaper article The Record (Bergen County, NJ)

Mixed Signals on Food Costs, but Don't Bet They're Falling

Article excerpt

Are food prices going up? Or are they going down?

Two weeks ago, the federal government released statistics showing that the answer to both questions is yes.

The Consumer Price Index, which tracks retail trends, shows that food prices rose 0.2 percent in December, the third consecutive monthly increase, for a 12-month jump of 1.8 percent.

The Bureau of Labor Statistics, which compiles the data, reported year-over-year price increases in all food groups except non- alcoholic beverages.

Consumers who like to eat out were hardest hit, with food eaten away from home up 2.5 percent after jumping 2.9 percent in 2011.

But we got a different message from the Produce Price Index, which was released a day earlier. It showed that wholesale prices for food at the end of the distribution chain fell 0.9 percent in December, reversing six consecutive monthly increases.

Over a third of the December drop could be traced to the index for beef and veal, which fell 4.8 percent after rising steadily for several months, the government said. In addition, prices for cheese fell.

Prices for food at earlier stages in the food chain were also down about 1 percent in December, and that usually means lower retail prices in subsequent months.

That would be welcome news after the steady stream of reports we've been hearing since last summer warning that the widespread drought in the nation's heartland would result in higher prices, especially for beef.

Unfortunately, the recent drop in the PPI does nothing to change that outlook, industry insiders say.

"Long term, the trend could go up with higher costs," said Martin Kohli, chief regional economist at the Bureau of Labor Statistics' New York office.

"Do not put too much stock in one month's index," Kohli said. "Food prices are volatile."

Back in September, the Food Institute, an Upper Saddle River- based industry trade association, estimated that food inflation largely from the drought would cost a family of four an extra $351.12 this year, or about $6.75 a week.

So far, food inflation has been "relatively tame" and is likely to continue to be so in the early part of 2013, said Brian Todd, president and CEO of the Food Institute. That's because retailers will probably continue absorbing "a good portion" of the increases they've faced on their buying side, he said. …

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