Food prices may slowly edge up
The U.S. Department of Agriculture says food prices are likely to increase slightly as the economy begins to recover. Why? Mitchell Hartman reports.
Groceries in the check-out line of a store in Washington, D.C. (Chip Somodevilla/Getty Images)
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Bill Radke: You may have noticed the price of clothes and school supplies are flat lately, maybe even falling a little. Food prices, though, might be on the verge of edging up. So says the U.S. Agriculture Department. And Marketplace's Mitchell Hartman filed this report.
Wal-Mart commercial: It's nice to know Wal-Mart checks other stores' prices, to make sure I save on everything we need this summer.
MITCHELL HARTMAN: Summer may cost less at Wal-Mart. But its price is actually down everywhere. Milk is averaging $2.99 a gallon -- down a dollar from a year ago. Beef and eggs are also sharply lower. We can thank the recession, which has weakened consumer demand. Plus, a steep drop in energy prices. But Gus Faucher of Moody's Economy.com says that trend is over.
GUS FAUCHER: Farmers are going to be paying more for fuel, for fertilizer, that's going to increase their cost.
Which they'll pass on to consumers. So food prices will likely edge up 2-3 percent for the year. But Faucher says the rest of the stuff we buy may not go up at all.
FAUCHER: It's very difficult for firms to raise prices. People just don't have the income, they're still trying to boost their savings. And so they aren't spending as much and I think that's going to be, to some extent, a permanent change.
A change that may be good for consumers, but could drag down economic growth for some time to come.
I'm Mitchell Hartman for Marketplace.
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From Utica, MN, 08/27/2009
I would like to meet the farmer (hog, dairy, beef, corn, soybean, oats)who can actually set the price for his goods; apparently, my husband and all of the farmers whom we know have been stupid for 30 years, thinking that they had to sell their goods at "market" price set by Hormel or some faceless trader who has not set foot in a corn field. Please tell me how my husband and I can set our prices so that we can accomplish two things: the price in the grocery store actually reflects the price we receive for our goods; and the neighbors who are near bankruptcy can be saved. We have lost money the past two years on our hog operation, not solely because of fertilizer and gas/heating prices, but also because Hormel charges a $10 per hog "handling" fee, a shipping fee, and--if there is any blemish on any hog--they basically pay us $8 total, rather than $35-55 per hundred pounds. My favorite story occurred when we received a single check in the mail for a sow: 2 cents. Though that was years ago, it emphasizes the fact that Hormel sets the price the farmer receives; for dairy farmers, my nearly-bankrupt neighbor just heard there will be an investigation into creameries to see exactly who is making the money. If you have any info on how my husband can set his prices for the corn, soybeans, and oats he is currently holding, please email us as soon as possible: we need a new roof on our home and the project is on hold until we can scrape up the money. (*Note: I teach in a rural school; due to health insurance, even my master's degree didn't make up for the cost, so that, in effect, my take-home pay will be nearly the same as it was in 1999.)
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