retail news in context, analysis with attitude

The Washington Post weighs in with the latest story about how, despite the fact that energy prices have plummeted in the current economic climate – becoming pretty much the only bright spot in a recessionary period – food prices show little sign of coming down.

“Earlier this year, oil prices reached record highs, setting off a chain reaction of price increases that has rippled through the economy, ultimately showing up on grocery receipts,” the Post writes. “In recent months, some of those trends began to reverse. With a gallon of gas now closer to $2, the cost of nearly everything has also decreased. The Labor Department reported this week that the Consumer Price Index, a closely watched inflation gauge, fell 1 percent in October -- the biggest one-month drop in more than 61 years.

“One exception, however, was food prices, which rose three-tenths of 1 percent compared with the previous month. Although prices for several types of food, including produce and dairy, dropped last month, categories such as cereal and meat continued to grow. According to the CPI, the cost of food has increased 6.1 percent over the past 12 months, not adjusted for inflation, though the rate of growth has slowed since this summer.”

KC's View:
As the Post notes, some retailers – Wegmans is the best example – have begun lowering prices, saying that it was important to their shoppers to anticipate lowered costs.

While I think that some manufacturers may try to keep their prices up for the time being, I also believe firmly that a lot of retailers will be putting pressure on those suppliers to lower their prices…and if they don't, they will increasingly be pushing private label alternatives to save shoppers money.

If the industry doesn’t do this on behalf of shoppers, then a lot of consumers are going to develop their own strategies for lowering their food costs. Better to be on the side of shoppers than to be seen as exploiting them in tough times.