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Food Costs On Rise, Families And Small Grocers Pay Price

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(credit: CBS) John Lauritsen
John Lauritsen is a reporter from Montevideo, Minn. He joined WCCO-...
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By John Lauritsen, WCCO-TV

(WCCO) — We all pay for food and the price is going up, but it isn’t like a rise in gas prices. There isn’t a big sign out in front of stores telling you the price of cereal has increased.

It is something you will likely notice at the check-out counter, however, and that has some shoppers wondering how they are going to adjust.

Right now the average family of four will spend about $771 a month on food. That comes out to be roughly $9,253 a year.

If food prices go up the projected 4 percent next year, those same families will be adding about $370 to their food bill.

“I think it’s going to be a matter of not buying the extras and just buying the essentials,” said consumer, Sue Begin.

In the larger scheme of things, a 4 percent price hike doesn’t sound overwhelming, but when you factor in that that hike could include cereal, produce, and other essential products — the numbers start to add up. Meat products aren’t immune either. In fact, bacon is 16 percent more expensive than it was a year ago.

It all comes back to a rise in commodity costs. Corn prices have increased, and because that ingredient is in so many foods it has caused a spike.

“Manufacturers are reducing the size of the packaging and it leaves the price the same on the shelf, but you get less for your money,” said Brad Hansen of Dean’s Super Market in Osseo, Minn.

That is just one observation Hansen has made. He said manufacturers have tried other things so they don’t have to increase prices, but he won’t be surprised if they are forced to increase costs in 2011.

“It’s hard for the small grocers because people are so price conscious right now that it’s hard to compete against the big Wal-Mart’s, Cub’s, and Supervalu’s,” said Hansen.

But compete is something they will have to do as consumers become more conscious.

“I think it will be a little tough on us. Ya know, because everything seems to be going up a little bit, but that will hurt us a little bit,” said consumer Jackie Krone.

One economist said pork had the highest rise of any food category of the past year. Pork prices rose by about 5 percent.

Those prices should fall back a bit, but at the same time beef prices and dairy prices could increase by about 5 percent in 2011.

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