LITTLE ROCK — The price of groceries in the United States jumped 6.2 percent from October 2010 to October this year, more than four times the increase in the comparable period ending in 2010 and more than twice the rise for the 12-month period the year before.
Consumers as well as grocery stores are being squeezed, economists and other experts say.
Shoppers are increasingly turning to coupons and looking for other discounts.
Bill Harrel, a retired Mabelvale electrician, said his union income hasn’t increased in about 20 years and has fallen far behind inflation.
“When I retired ... our income was enough to afford groceries and other essentials, but my income doesn’t mean what it used to,” Harrel said Tuesday at the Edwards Food Giant in Bryant.
In every month this year through October, grocery prices were higher than in the corresponding month last year, according to the Consumer Price Index, which is compiled by the U.S. Bureau of Labor Statistics to track the price of consumer goods.
The most that food inflation grew in any single month in 2010 was 0.5 percent in March; the most this year was 1.1 percent, also in March.
For two months in 2010 - June and July - inflation fell. The slowest it grew in 2011 was 0.1 percent in October, the most recent month available.
DAMAGE DONE
While October showed signs of the rate slowing, the damage has been done. Grocery stores have been raising prices on many common household items, said economist Joel Naroff of Holland, Pa.-based Naroff Economic Advisors.
Grocers say they have to raise prices to remain profitable and stay in business.
“The thing everybody has to remember is we’ve still got to keep the lights on, we’ve still got to pay the rent, and we’ve still got to pay our employees,” said Joe Bell, a mid-South spokesman for The Kroger Co. “So, yes, if inflation continues ... as things get squeezed, [Kroger] reaches a point where everyone says enough is enough,” it’s time to pass along those costs.
Naroff thinks groceryprice inflation will continue into 2012. “We had a good [Consumer Price Index] in October, but I am not so certain I expect that to continue. I am more concerned that prices will accelerate once again.”
He said there are many factors that can cause prices on everyday foods to go up, but the main reason is the demand for higher-quality foodsin emerging economies such as China’s and India’s.
John Anderson, an economist with the American Farm Bureau, said he thinks October’s store-bought food prices being up only 0.1 percent, after three consecutive months of 0.6 percent increases, is a sign of good things to come.
“If you look at the numbers, we have seen moderately higher prices this year,” Anderson said. “I think that’s probably coming close to running its course. Going forward to 2012, we’ll really be back to a more normal food price inflation.”
From October 2009 to October 2010, inflation was 2.8 percent; it was 1.4 percent the year before.
He pointed to the price of energy and a year marked by weather disasters across the country as reasons for the higher-than-usual food inflation.
Even though some grocery stores have been raising some prices, many are still feeling a pinch.
Janney Capital Markets said in an analyst note that Kroger had slimmer margins than previously in order to maintain competitive momentum in the third quarter this year.
Anderson said that “in the past couple of years, retailers have been dealing with higher prices very cautiously. There has been a perception, and an accurate one, that consumers have been very reluctant to spend money. ... In that kind of environment, retailers, as much as they can, will try and hold the line on prices because they are concerned about losing market share.It’s a very competitive business.”
Naroff agreed, adding that margins for grocery stores are “extraordinarily low.”
That makes the decision to raise prices on goods difficult for grocery stores, butone that has to be made, said Paul Rowton, a vice president at Edwards Food Giant, a Malvern-based company with eight stores in the state.
“When manufacturers issue a price increase we have to determine what, if any, we are going to pass along to consumers to maintain margins, even though those margins are real thin,” Rowton said. “We’ll do that on a case-bycase basis.”
Americans paid about 13 percent more this year for Thanksgiving groceries, according to the American Farm Bureau. The cost of a traditional holiday meal for 10 people rose to $49.20 from $43.47 last year, the biggest increase since 1990.
According to an Arkansas Farm Bureau survey, the price of a Thanksgiving meal in the state was up about 14 percent from 2010.
It cost a gathering of 10 people $45.11, or $4.50 per person, up from last year’s average of $39.61.
There was a 26-cent-perpound increase in the average cost of a turkey - from 85 cents a pound to $1.11.
Eggs have gone up more than any other grocery store item, jumping nearly 23 percent from October 2010 to October 2011. Whole milk is about 11 percent more expensive. Coffee rose 16 percent.
On a brighter note, because of the higher price of foods almost across the board, retailers are more likely to pass along manufacturers’ discounts to the consumers, Naroff said.
“When those kind of opportunities arise for a grocery store, it’s going to take advantage of it. It has to,” Naroff said. “That comes from the fact that [grocery stores] do get price reductions from the manufacturer. So when you get a [10 items for] $10 deal, it isn’t simply the grocery store being nice to you. The store got a good deal, and it’s passing it on.”
DEAL SHOPPING
Shoppers in the Little Rock area said deals are key in where they choose to shop.
“I like the deals,” Michelle Griffis said while waiting on some meat at the Edwards Food Giant. “I’ll shop the deals here and go to the Kroger and check their deals.”
Others have taken advantage of the coupon trend made popular by the television show Extreme Couponing on TLC.
The reality show features people who combine shopping skills with couponing to save as much money as possible while accumulating the most groceries.
Anna Kyle of North Little Rock, who does most of her shopping at Kroger, said she has saved as much as 94 percent on her grocery bill by clipping coupons. She typically saves about 40 percent to 60 percent.
“I do not pay full retail for anything,” Kyle said. “I shop for sales. I buy what is on sale and what I have a coupon for,and stock up on items while they are the most affordable.”
She said she enjoys looking at her receipt at the end of her shopping trip to see how much she has saved. Kyle, who started clipping coupons in April, the month after the biggest increase in food prices this year, said she started clipping to save money for her family.
She noted that she often buys food she may not use or want and winds up giving it to relatives, friends or areafood banks.
Bell, the Kroger spokesman, said few people have time to clip enough coupons to save a substantial amount of money. He said most people use coupons for things they themselves need and take advantage of in-store deals.
“Coupons are one of those things, you have to work at it,” Bell said. “If you want to save any money it takes a lot of time to hunt the coupons, clip them out and make sure it’s the products you want.”
Front Section, Pages 1 on 11/27/2011