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Shopping for a deal: Residents grapple with rising grocery prices

By COURTENAY EDELHART, Californian staff writer
e-mail: cedelhart@bakersfield.com | Wednesday, Apr 16 2008 7:08 PM

Last Updated: Thursday, Apr 17 2008 7:15 AM

Irene Sanchez lives on the west side of the city, but after visiting a friend in northeast Bakersfield, she stopped to pick up a few things at a nearby Albertson’s supermarket, which, in her view, has the best prices on organic produce. For eggs, though, she usually goes to Longs drug store.

“We shop at all different stores now because you can’t go to just one place anymore,” said Sanchez, 28, as she loaded groceries into her car. “You have to shop around to get the best prices.”

That’s just one way consumers are coping with U.S. food prices that have risen 4 percent since last year, compared with an average rise of 2.5 percent per year for the last 15 years, according to the U.S. Department of Agriculture.

Prices might increase as much as 4.5 percent this year, the agency predicts.

In March, soaring food and energy costs pushed the Consumer Price Index up 0.9 percent over February, the Bureau of Labor Statistics reported Wednesday. The index tracks the price of the most common items Americans buy. Food and beverages, including alcoholic drinks, account for 15 percent of the index, which is up 4 percent over March of last year.

Leanne Cave, 52, is feeling it. The northeast Bakersfield grandmother estimates her monthly grocery bill is up $250, “easily.”

“We use our discount card and coupons and try to get the generic brands if they taste OK,” she said.

A combination of factors has pushed up prices every step of the way from farm to dinner fork, said Bureau of Labor Statistics spokesman Todd Johnson.

Among them:

• Raw material prices are up, which puts pressure on farmers who are paying more for grains that feed livestock.

• Corn and byproducts such as corn syrup are especially vulnerable with ethanol manufacturers competing with food producers.

• Growing foreign markets, particularly India and China, are hiking up overall demand.

• Higher gasoline prices have elevated the cost of moving product to retailers. Stores, in turn, are passing along costs to consumers.

And it could get worse before it gets better.

“We’re not really seeing the raw material prices in the CPI yet,” Johnson said. “It’s not like gasoline, where oil barrel prices show up at retail gas stations immediately, so it would be reasonable to assume a scenario of still higher food prices playing itself out over the next few months.”

Consumers are hunkering down, according to Rosemont, Ill., market research firm The NPD Group Inc. Compared to last year, more consumers are trying to use up leftovers, preparing meals at home, stocking up on items that are on sale, and choosing private label products over brand names.

“Despite rising grocery prices, in-home meals still provide a better value to consumers,” said Arnie Schwartz, who heads up The NPD Group’s food and beverage unit. “One estimate shows that an in-home meal costs about a third of a meal purchased away from home.”

That’s the one silver lining for grocers such as Green Frog Markets.

“People are coming back to us because they know we’re a better value than eating out,” said president Scott Hair.

“We don’t hear a lot of grumbling in the stores because everybody knows that fuel prices are up and corn’s up, and all that affects our prices.”

Grocers have no choice but to pass along those costs because the industry is extremely competitive, which limits profit margins to as little as 3 percent, said Dave Heylen, spokesman for the California Grocers Association.

“When your profit margin is that tight, there isn’t much room to absorb those costs,” he said.

So consumers will just have to grin and bear it for now.

Kristi Swan, 44, of southwest Bakersfield, has begun shopping at discount stores more. This week, she bought some groceries at Wal-Mart.

“I’m getting more of the cheaper brands,” she said. “Most times, the food’s just as good.”