Food and fuel prices have been rising this summer along with the heat. Sheila Mullins, a single mom in Mesa, said she’s noticed a spike in milk prices.
“I go through a lot of it because I have a teenage boy who plays football,” she said. “Milk is high, but I’ve still got to buy it.”
A trip to the supermarket reveals higher prices on many items, including milk, bread, beef, eggs, apples, lettuce, oranges, salad dressing and soft drinks.
Nick and Gabby Sanchez, also of Mesa, said they hunt for bargains to keep their grocery bills manageable.
“I have noticed a hike in some of the items,” Nick Sanchez said.
The grocery store is not the only place consumers are feeling pinched. Gas prices have dropped in recent weeks, but the average price hasn’t fallen far below $3 a gallon. Families are having to change their spending habits.
“The more you can do without and not buy, the more pricing control consumers have,” said Tracy Clark, economist for the W.P. Carey School of Business at Arizona State University.
In May, the Consumer Price Index for food and beverages was 3.9 percent higher than for the same month in 2006, according to the U.S. Bureau of Labor Statistics.
“Gasoline and diesel cause ripple effects through the rest of the economy because there’s a large transportation component to food,” Clark said.
While those necessities get more expensive, prices for some items, such as consumer electronics, are actually falling.
FARM TO FORK
A myriad of “farm to fork” issues are affecting what consumers pay for groceries, said George Seitts, president of the Arizona Food Marketing Alliance, which represents and advocates the interests of Arizona’s food industry.
“I think that these issues probably are here to stay,” he said. “If you follow the grain prices and rising feed prices, and fuel prices, you bet, the trend is all upward.”
All items that involve grain during the production process are rising in cost, said Duane Proulx, Bashas’ vice president of grocery procurement.
An increasing number of farmers are growing corn for ethanol as a source of domestic fuel, and that is decreasing the amount of corn for use in the production of food, Proulx said. As a result, items like eggs, cheese and processed meats have higher costs, he said.
“Other commodities that contain vegetable oils are also being impacted because farmers are converting their fields from soy to corn,” he said. “Because of this, products like mayonnaise and salad dressings are increasing in cost, as well as cereals, breads and pet foods.”
Teri Gault, founder and CEO of The Grocery Game, said consumers have little impact on pricing for grocery items that involve corn in any way. The California-based company tracks prices on more than 10,000 items in every supermarket chain and provides subscribers with lists detailing how they can save money.
“The corn gets expensive and corn syrup is in everything,” she said. “We feed corn to our chickens and cows, so now all of our meat is expensive and all of our dairy products are expensive. So now we’re short on corn, plus a lot of farmers are planting more corn and less soybeans and wheat and other things ... so now the price goes up on everything else that they’re planting because they’re not planting enough of it. I hate that stupid corn.”
A “fuel versus food” debate is raging internationally, and that affects what we pay at the supermarket, Seitts said.
“Do I grow corn for food, or do I grow it for fuel to help make gasoline products?” he said. “There are also environmental concerns out there over more corn production.”
Other factors affecting grocery prices include public demand for more organic products, transportation issues, food safety concerns and labor shortages, Seitts said.
“It’s getting more difficult to harvest some of our nation’s fruits and vegetables because of the labor shortages out there,” he said.
By changing your shopping strategy, you can get a lot more for a lot less at the supermarket, Gault said.
“I read things all the time about grocery tips and savings, and about a third of it I just have to laugh because they’re just things that we blindly believe for way too long and they’re not true,” she said. “For example, make a meal plan and buy what you need every week, and only what you need. That’s a great way to waste a lot of money.”
Consumers can save a lot by using coupons, and many coupons now offer higher savings than last year, Gault said.
“For example, we got $1 off Yuban coffee last year, and this year we got $1.50 off,” she said. “Also, where we’ve gotten 35 cents off French’s mustard last year, we got 50 cents off this year. When you go and get a newspaper, there’s anywhere from $250 to $350 worth of coupons every week.”
The average supermarket is comprised of about 15 product categories, and weekly specials tend to be concentrated in two or more of those categories, Gault said.
“If you shop each week only for what you need, you’re going to overspend on the other 12 categories,” she said. “But if you’re stockpiling, which is buying more than you need of those things that are on sale with the coupons ... you’re not just shopping each week for what you need and overspending on 80 percent of your groceries.”
Stockpiling doesn’t require spending more money up front because you’re going to get more for less, Gault said. The only items you can’t stockpile are fresh produce and milk products because of the shorter shelf life, she said.
“But you can stockpile and save money on everything else,” she said.
One area where consumers aren’t feeling the pinch is electronics. HD DVD players are now retailing for less than $300, while Sony just knocked $100 off the price of its PlayStation 3.
“Gas prices go up, and yet consumer electronics go down,” said Matt Duda, Ultimate Electronics’ director of merchandising for video. “A lot of that is driven by creating excitement around technology ... so the manufacturer wants to pass on savings to the consumer to entice them to want to come and buy those electronics.”
Consumer electronics can provide a cheaper option for summer vacation, Duda said.
“When we start to see gas prices go up, the first thing that’s going to happen is travel is going to go down,” he said. “People are going to want to stay home, and they’re going to want to reinvest those dollars into another pastime, another hobby. That’s where we’re positioning ourselves to attract those customers, and have them come in and buy electronics. Who doesn’t want to have a big screen if they’re going to stay home and watch movies rather than use that money and go for a trip when it’s going to be extremely expensive?”