- The Washington Times - Monday, October 4, 2004

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.

One reason for higher poultry prices: More fast-food chains are adding chicken to their menus to appease diet-conscious consumers.

The price of chicken feed also has increased, Mr. Leibtag said.

It isn’t just meat and poultry prices that are increasing.

A shortage of dairy cows and an increase in demand for dairy products have caused the price of milk, cheese, butter and ice cream to rise.

A half-gallon container of ice cream, for example, has averaged $3.80 this year, compared with $2.63 in 1994, a 45 percent increase.

Dairy farmers in the United States agreed last fall to produce less milk after the industry endured two years of record-low prices that drove many farmers out of business.

A drought in Australia and New Zealand, two of the world’s biggest milk exporters, also cut into the dairy supply in the United States.

Spokesmen for the region’s largest supermarket chains referred questions about retail food prices to the Food Marketing Institute, a trade group that represents grocery stores and food wholesalers.

A spokesman for the organization e-mailed a reporter a series of statements on prices, marketing costs, and competition and profit.

One of the statements read: “The prices for food, as with all consumer products, are subject to the laws of supply and demand. When costs for key commodities rise because of reduced supplies or when inflation boosts marketing costs, food prices tend to climb at a faster rate than overall consumer prices.

“When costs for key commodities fall, consumer prices will follow, as long as the steady marketing costs remain steady.”

Not all food prices have risen sharply, according to the government data.

The cost of a pound of white sugar has averaged 42 cents this year, just 5 cents more than in 1994.

The cost of a pound of 100 percent ground roast coffee has dropped to $2.86 this year from $3.40 a decade earlier.

However, Starbucks Corp. announced plans this week to raise its prices an average of 11 cents a cup in North America to cover higher costs for its ingredients and health insurance.

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