Food prices drop 12%

Food prices drop 12%
American Farm Bureau Federation

WASHINGTON, D.C., October 5, 2010 – Retail food prices at the supermarket dipped slightly during the third quarter of 2010, according to the latest American Farm Bureau Federation Marketbasket Survey. The informal survey shows the total cost of 16 food items that can be used to prepare one or more meals was $46.17, down $1.03 or 2 percent compared to the second quarter of 2010. The total average price for the 16 items was down 12 cents compared to one year ago. Of the 16 items surveyed, 10 decreased and six increased in average price compared to the prior quarter.  Sliced deli ham, sirloin tip roast, flour, bread and eggs declined the most in dollar value compared to the second quarter.

Sliced deli ham decreased 58 cents to $4.66 per pound; sirloin tip roast decreased 24 cents to $3.86 per pound; flour dropped 20 cents to $2.15 for a 5-pound bag; bread dropped 15 cents to $1.61 for a 20-ounce loaf; and eggs dropped 12 cents to $1.41 per dozen.  “Overall, retail food prices have been relatively stable in 2010,” said AFBF Economist John Anderson. “Price data collected by our volunteer shoppers during the third quarter of the year shows that pattern is continuing to hold.”

Other items that decreased in price since the second quarter were toasted oat cereal, down 11 cents to $2.84 for a 9-ounce box; shredded cheddar cheese, down 7 cents to $4.09 per pound; vegetable oil, down 6 cents to $2.55 for a 32-ounce bottle; bagged salad, down 5 cents to $2.75 for a 1-pound bag; and orange juice, down 3 cents for a half-gallon to $2.97.

Most items showing a decrease in retail price this quarter also showed year-to-year declines. Compared to one year ago, flour fell 13 percent, bread was down 8 percent, vegetable oil dropped 6 percent and orange juice was 5 percent lower.

Six foods increased slightly in price compared to the prior quarter: boneless chicken breasts, up 19 cents to $3.44 per pound; Russet potatoes, up 12 cents to $2.63 for a 5-pound bag; bacon, up 11 cents to $3.64 per pound; whole milk, up 10 cents to $3.16 per gallon; apples, up 4 cents to $1.50 per pound; and ground chuck, up 2 cents to $2.91 per pound.

“In general, meat demand has improved quite a bit since 2009,” Anderson said. “Typically, when the economy slows and consumer confidence slips as we saw happen during the third quarter, retail demand holds up better for lower-priced products, which is consistent with what our shoppers reported.”

The year-to-year direction of the marketbasket survey tracks with the federal government’s Consumer Price Index (www.bls.gov/cpi) report for food at home. As retail grocery prices have increased gradually over time, the share of the average food dollar that America’s farm and ranch families receive has dropped.

“In the mid-1970s, farmers received about one-third of consumer retail food expenditures for food eaten at home and away from home, on average. Since then, that figure has decreased steadily and is now just 19 percent, according to Agriculture Department statistics,” Anderson said.

Using the “food at home and away from home” percentage across-the-board, the farmer’s share of this quarter’s $46.17 marketbasket would be $8.77.

AFBF, the nation’s largest general farm organization, has been conducting the informal quarterly marketbasket survey of retail food price trends since 1989. The mix of foods in the marketbasket was updated during the first quarter of 2008.

According to USDA, Americans spend just under 10 percent of their disposable annual income on food, the lowest average of any country in the world. A total of 62 shoppers in 33 states participated in the latest survey, conducted in August.

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Sidebar: Tracking Milk and Egg Trends

For the third quarter of 2010, shoppers reported the average price for a half-gallon of regular whole milk was $2.04, down 2 cents from the prior quarter. The average price for one gallon of regular whole milk was $3.16, up 10 cents. Comparing per-quart prices, the retail price for whole milk sold in gallon containers was about 25 percent lower compared to half-gallon containers, a typical volume discount long employed by retailers.

The average price for a half-gallon of rBST-free milk was $3.36, down 2 cents from the last quarter, about 65 percent higher than the reported retail price for a half-gallon of regular milk ($2.04).

The average price for a half-gallon of organic milk was $3.62, down 3 cents compared to the prior quarter–about 80 percent higher than the reported retail price for a half-gallon of regular milk ($2.04).

Compared to a year ago (third quarter of 2009), the retail price for regular milk in gallon containers was up about 10 percent while regular milk in half-gallon containers increased 8 percent. The average retail price for rBST-free milk increased about 1 percent in a year’s time. The average retail price for organic milk in half-gallon containers dropped about 4 percent compared to the prior year.

For the third quarter of 2010, the average price for one dozen regular eggs was $1.41. The average price for a dozen “cage-free” eggs was $2.90, more than double the cost of regular eggs. Compared to a year ago (third quarter of 2009), regular eggs decreased 2 percent while “cage-free” eggs decreased 5 percent.

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