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Monday, March 31, 2008

AP: Food Price Inflation Changes How we Shop

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I had mentioned the potential for tough times ahead for restaurants a long time ago [Sept 19: Tough Times Ahead: Restaurants?] - the stock prices began foretelling this way ahead of the reality on the ground, but now the reality on the ground is catching up. Or at least some parts of the media are catching up to the reality... perhaps this is nature's way of solving the American obesity epidemic?
  • Steadily rising food costs aren't just causing grocery shoppers to do a double-take at the checkout line — they're also changing the very ways we feed our families.
  • The worst case of food inflation in nearly 20 years has more Americans giving up restaurant meals to eat at home. We're buying fewer luxury food items, eating more leftovers and buying more store brands instead of name-brand items.
  • For Peggy and David Valdez of Houston, feeding their family of four means scouring grocer ads for the best prices, taking fewer trips as a way to save gas and simply buying less food, period.
  • Soaring prices are causing shoppers to rethink long-held habits such as store loyalty. Wal-Mart and other supercenters that sell food now account for 24 percent of the market, according to the most recent annual survey of shopping habits by Hammonds' organization. [Remember - we pointed out this potential shift from Target shoppers to Walmart shoppers here in December, and the strength in the chart of Walmart stood out like a sore thumb when we looked at what was holding up in the depths of the January selloff - it is no coincidence - it is large scale "pooring" of middle class America; living standards slowly seeping away; not realized by those who run the Street - this story is full of people with "normal jobs" i.e. teachers - we are not talking low end wage jobs. Upper middle class management/professionals? Still doing ok - their issue is more tied to mortgages - the gap between have and have nots will continue into a gulf as we move forward.]
  • Gina Pierson, a music teacher in Columbia, Mo., buys her family's staples at local grocery stores but makes regular trips to Wal-Mart to supplement the weekly shopping list. Like many families struggling to get by, Pierson and her husband, a public school teacher, are adjusting their approach to buying, cooking and eating food. Restaurant meals are now almost a luxury.
  • In 2007, the FMI survey showed the average number of weekly shopping trips falling below two per household for the first time.
  • Paula Curtis, a mental health worker in Montpelier, Vt., said her grocery bill has been steadily climbing by $10 to $20 a week. She has cut back on meat, fruit, vegetables and snack food, and buys milk at the gas station, where she said it's cheaper. "Every time I go, it's more and more," she said. "I make a list, but I don't necessarily get everything on it because I can't afford everything."
  • Those who can't absorb the added expenses are increasingly seeking help from food pantries. America's Harvest, which distributes nearly two billion pounds of food and grocery products each year to more than 200 food banks across the country, estimates that its overall client load increased by 20 percent in the fourth quarter of 2007. [And don't forget the shortages that are now becoming rampant at food banks]
  • The jump has been even higher at the Central Missouri Food Bank's pantry in Columbia, a college town halfway between Kansas City and St. Louis. The food pantry served 7,200 people in 2007, an increase of more than 50 percent over two years, said executive director Peggy Kirkpatrick. Columbia used to be considered inflation-proof because of its high-paying university jobs and proximity to the state capital, 30 miles away in Jefferson City. "That's not the case anymore," she said.
  • Not all shoppers are struggling with the changes. At the Whole Foods Market in downtown Seattle, Beth Miller didn't think twice about paying $6.39 for a gallon of organic orange juice, or $4 for a dozen eggs at the store, which specializes in organic and natural foods.
  • Among retailers, the surge in commodity prices — from corn, now in high demand because of increased ethanol production, to wheat that has tripled in price over the past 10 months — has some industry observers suggesting that higher food prices aren't a temporary fluctuation but instead may be here to stay. "We don't exactly have a crystal ball," said Whole Foods' Perry Abbenante, a senior global grocery buyer. "But I'm not sure (prices) are going back. We're preparing for a new threshold."
But don't worry, CPI food and energy included will show something like 4% inflation - nothing to worry about... sorry I forgot to mention everything will be fine in 6 months (it's been 72 hours since I've stated that and I didn't want my readers to feel any angst) So please carry on... fall 2008 is going to be nirvana.

[Do the Bottom 80% of Americans Stand a Chance?]

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