Food requires more dough

BY ROD WALTON World Staff Writer
Thursday, May 08, 2008

Industry experts say high fuel prices are a major factor.

Sorry to spoil your breakfast, but food inflation is going to get worse before it gets better, grocery and consumer experts say.

Grocery costs will jump anywhere from 4 percent to 7 percent or even more this year, they predict.

"Eventually, it has to hit everyone in the pocketbook," said Doyle Kirk, operations director for Reasor's grocery stores. "They have to adjust."

That means grocers and restaurateurs, as well as consumers. Surging fuel and livestock-feed prices will push up the cost of everything from bread to eggs, chicken, pork and even potato chips, not to mention the occasional night on the town.

Food inflation added about 4 percent to products last year, above the 2.4 percent rise in 2006, according to an April 10 Congressional Research Service report. The study blamed energy and commodity prices as driving forces for an expected 4.5 percent increase this year.

On the storeroom floor, however, grocers are seeing even higher inflationary pressures. Kirk said Associated Wholesale Grocers, which is Reasor's main supplier in Oklahoma City, told him to expect 7 percent in increased expenses on goods, while Frito-Lay hit him with an 8 percent hike recently.

"It's $4 diesel," Kirk cited as a key reason for food inflation. If it wasn't for higher transportation costs, he said, "we'd still be where we were."

Petty's Fine Foods store manager Mike Griffeth has faced the same stiff increases from wholesalers. His Tulsa supermarket, located in Utica Square, is seeing the type of hikes that Griffeth has never before faced.

"I can't downplay that," he said.

Customers have been relatively accepting because of media coverage of energy and commodity prices, he said.

But, Griffeth admitted, this is a competitive business where everyone is cutting it close while trying to retain customers.

"Retailers try to absorb it where they can," he said.

Bread and cooking oils also are expected to go up this year.

One staple that might be a little kinder to the pocketbook is milk, which was down 15 to 20 cents this week to about $3.78 per gallon at Reasor's.

"Milk shot up a lot last year," Kirk pointed out, "so this may be more of a correction to where it ought to be."

Last year's overall 4 percent jump was the biggest since 1990, according to the Congressional Research Service report. Current food inflation, however, follows nearly 20 years of relative price stability, the federal study added.

Average Americans typically spend less of their income on food -- about 12.6 percent -- than residents in many other countries. Yet low-income families may spend closer to 20 percent on groceries and eating out.

"When food prices rise, families with lower incomes feel the pinch more acutely," the report says. "A 4 percent to 5 percent increase in food expenditures has a significant impact on purchasing power for low-income families."

Micah Hartwell and Karl Villadsen can feel that impact. Hartwell is nutrition service director at the Tulsa Cares Food Pantry at 3507 E. Admiral Place, where the budget stays the same but the buying power has diminished for its hundreds of clients.

The pantry must spend $15,000 more this year to buy the same amount of food it bought last year, Hartwell said.

"We try to make sure we have the necessities," he said. "Sometimes we limit the variety we have."

Villadsen volunteers at food pantries. He also tries to get by on about $1,000 monthly in disability payments.

He shops less often but does not necessarily buy more on these rarer excursions.

"Everything is creeping up," he said, referring to utility bills as well as grocery costs. "I find myself a little more conscious of how much I get.

"Now I stop and think about how much I have in the pantry," Villadsen added. "Don't get two if one will get you by."

Oklahoma Grocers Association President Ron Edgmon hopes consumers won't blame the supermarkets. The nationwide grocery business typically operates on only a 1 percent net profit margin due to competitive pricing, he said.

"They are caught in the middle," Edgmon said. "If they didn't pass on increases because of fuel prices, they could actually go into the negative."

Oklahoma State University's Sissy Osteen believes that some price pain is worse than others. As resource management specialist for OSU's Extension Service, Osteen has thought long and hard about how to deal with food inflation.

Planning grocery trips well in advance and avoiding impulse buying are two no-brainers, she said. Another key tradeoff is to spend less time out and more in the kitchen.

"I'd say it's a great time to learn to cook," Osteen said.

The average American family of four spends about $709 on food each month, according to the U.S. Department of Labor. Going to the store three times a week and spending just $10 on impulse buys each time can add $120 each month to the bill.

Grocery industry planners believe that the inflation will continue as long as the costs of gas, corn and wheat remain high and rising. Thankfully, Oklahoma unemployment is low and wages are relatively stable enough to deal with it right now.

"That's why we're not seeing the negatives as much," Kirk said.

Even so, Oklahoma residents may find higher food prices harder to swallow as the year wears on. The key, Osteen stressed, is planning, self-denial and more planning.

"We're talking about tightening up," she said.

Rod Walton 581-8457
rod.walton@tulsaworld.com

Food for thought: Lower your eating costs

Plan ahead: Make fewer trips to the store.

Go generic: Save by buying store brands instead of national brands.

Cheaper cuts: Chicken thighs and legs cost less than chicken breasts, for instance.

Coupons: They do help. Some stores double coupons’ face value.

Size up the offerings: Pay attention to per unit pricing such as ounces. Food companies are making products smaller to keep prices steady.

Take lunch to work: Eating a homemade lunch instead of eating out can save $1,000 a year.

From Susie Osteen and OSU Extension Service

Associated Images:

Prices are posted above fresh fruits at the Reasor’s supermarket at 21st Street and Yale Avenue. A federal study predicts a 4.5 percent hike in the price of food this year, but Reasor’s main supplier has told the store to expect a 7 percent increase.

Albert Hall, a meat cutter at the Reasor’s at 21st Street and Yale Avenue in Tulsa, stocks the fresh meat and fish counter Tuesday. Experts on the economy say eating at home rather than eating out is one way to keep the rising cost of food in check.