Inflation is beginning to take hold as food prices are rising at a greater rate than in the prior year. In addition, the core inflation reading, which excludes food and energy, increased at the highest rate in a year. While the actual core inflation data provided by the government suggests just under a 2% rate year over year, anyone that’s been to the grocery store lately will notice higher prices. Will this trend continue throughout 2013?
Why the increase in food prices?
Many of the agricultural rich states have experienced a severe drought, which has resulted in shortages in food supplies (i.e. soybeans). Supermarket chains have responded by purchasing overseas and passing the higher cost on to the consumer.
Other food prices will rise too
Food supplies will not be the only category to rise in price in 2013. Across the board, food prices will rise on average $0.05 to $0.20 per pound/container. Some foods will experience a greater increase such as milk/cheese and vegetables. This is largely due to higher feeding costs and the chains resorting to overseas importers for over half of the demand. When accounting for these costs, you should expect to pay 3%-5% more on groceries this year.
What can I do to offset the rising prices?
Food manufacturer’s coupons are often available in the Sunday newspaper. Many grocery chains run their sales Wednesday through Tuesday, and as Sunday falls in the middle of that sales cycle, items such as canned goods, cereals and other pantry staples are likely still available and on the shelves, and can be purchased for a discounted price with the Sunday coupons. Also, if you go to the store in the late afternoon or early evening, you will often have access to reduced prices on other items (like meats and baked goods) that need to be sold that day. You may also explore buying dry food items in bulk online or through one of the discount food chains such as Costco.
More questions? Ask your personal finance questions online.
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