With prices for grain and gasoline going down, you’ve probably noticed dropping prices at your local grocery store.
You haven’t? Well neither have the nation’s grocery store owners, some of whom are lodging a protest with food processors and wholesalers.
A few months ago, when grocery prices shot up significantly, blame was assigned to high commodity prices and especially gasoline prices. Wheat and corn prices were at record levels, and the price of gasoline and diesel fuel was sky high. The high cost of grain, along with the high cost for the fuel needed to get products to market seemed to justify the higher prices even though the grocery bill was making a bigger dent in family budgets.
Unfortunately, once prices go up, they are far less likely to come back down. Nonetheless, U.S. consumers are getting some assistance from supermarkets that are taking their case to the nation’s largest food manufacturers.
Some examples cited by grocers and included in a news story this week make a pretty strong argument:
• The wholesale price of a box of Kraft macaroni and cheese has increased an average of 9 percent in the last year in spite of the fact that wheat and cheese prices have plunged by 38 percent to 68 percent during that time.
• The wholesale price of a Nestle’s ice cream product has risen 14 percent while the prices dairy farmers receive for their milk has dropped by 40 percent.
The food companies say their prices are fair because they are coping with rising prices themselves, but that argument doesn’t make a lot of sense. It’s true that the cost of corn is only a tiny fraction of the cost of producing a box of corn flakes, but the price of corn, along with virtually every other production cost, has declined, so where are the increased costs?
With the job market being what it is, it’s unlikely that labor costs have risen significantly. Gasoline prices, which took much of the blame for rising prices, are about half what they were a few months ago. Even interest rates are down.
As a top executive in the company that owns Safeway concluded, it’s “disingenuous” to ask consumers to pay higher prices when virtually every cost of producing those products has declined.
We agree and applaud the efforts of the nation’s grocers to try to hold food manufacturers accountable.