Rising grocery prices hit home

The bread you are buying at the supermarket these days costs a lot more dough than it did 10 years ago.

The prices of bread and many other supermarket staples — including eggs, apples, butter, sugar and coffee — have risen sharply since 1994, according to Consumer Price Index data collected by the federal Bureau of Labor Statistics.

The retail cost of a pound of 100 percent ground beef, for example, was $2.16 a pound during the first seven months of 2004, compared with $1.48 for all of 1994 — a 46 percent spike.

During the previous 10-year period, ground-beef prices rose 15 percent, from $1.29 per pound in 1984 to the $1.48 price in 1994.

In most instances, economists say a stronger economy and higher energy prices have pushed up prices at the wholesale level. This has forced retailers to pass along the higher costs to shoppers at the cash register.

In addition, the higher fuel prices have made it more expensive to ship food — another cost passed along to consumers.

“Demand has stayed strong, but you feel like at some point, how much longer will consumers be willing to pay these prices?” said Ephraim Leibtag, an Agriculture Department economist.

Overall, the price of food increased an average of 2.5 percent each year from 1994 through 2003, according to the Bureau of Labor Statistics and the Agriculture Department.

From 1984 through 1993, the annual food inflation rate averaged 3.5 percent, the agencies reported.

Several factors have sent beef prices soaring, Mr. Leibtag said.

Canadian cattle imports have been banned in the United States since May 2003, when Canadian officials announced that a cow slaughtered in Alberta had tested positive for mad cow disease.

This reduced the number of cattle going to market in the United States. The discovery of a Washington state dairy cow infected with mad cow disease led to lower beef prices initially, but consumers largely shrugged off the incident.

Demand for beef has remained strong because of the popularity of “South Beach” and other low-carbohydrate diets, economists say.

When beef prices increase, shoppers tend to switch to lower-priced alternatives, according to consumer analysts. However, higher demand puts price pressure on the cheaper alternatives.

For example, a pound of fresh chicken cost $1.07 during the first seven months of 2004, up from 90 cents in 1994. The 19 percent increase outpaced the price spike during the previous 10-year period, when the cost of fresh chicken rose from 81 cents per pound in 1984 to 90 cents in 1994.

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