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Friday, May 22, 2009
Grocery Prices Edge Up In April; First Monthly Increase Since September
By Mark Lieberman
FOXBusiness

If you think your grocery bill was a bit higher last month, you were right. The total cost of the Fox Business Shopping
Cart rose 17¢ or 0.2% in April – the first month-month increase since last September. The total cost for the 31-item basket
was $75.64.
In the last year, the cost of the items in the cart is up $1.18, or 1.59%, slightly higher than the 1.54% year-year increase
registered in March.
Also in April, average hourly earnings scarcely budged, up just 1¢ to $18.51 which means it the average worker slightly longer
to earn the cost of the entire basket: four hours and five minutes in April compared with four hours and minutes in March.
A year earlier though, the average wage earner had to work four hours and ten minutes to earn the money necessary to pay for
the items in the basket.
FBN calculates “minutes to earn” by dividing the cost of the basket by average hourly earnings as reported by the Bureau of
Labor Statistics. While the increase in average hourly earnings edged up in April, weekly hours remained flat at a record
low which means though the average worker could earn the cost of the shopping cart faster, the time spent still represented
a greater percentage of the workweek than it had a year ago.
The FBN Shopping Cart includes basic food items -- milk, butter, eggs, bread, meat, fruit and vegetables -- as well as fun
foods such as potato chips, chocolate chip cookies, soda, beer and ice cream. All the items are tracked by the Bureau of Labor
Statistics as part of the monthly consumer price index report.
In April, according to the Bureau of Labor Statistics, the total consumer price index rose 0.2% but year-year, the CPI was
down 0.7%, the second consecutive month of “deflation.” The food price index fell for the third straight month and the year-year
increase in the index was 3.31%, the weakest since February 2007.
Unlike March when only one category of food products – grains – increased in aggregate, meat, produce and “other” foods --
cola, chocolate chip cookies, beer, potato chips, ice cream, peanut butter and sugar – all went up in price in April. Prices
for grain and dairy products dropped.
Year-year, price increases were led by “other” products and meat. Dairy, grain and produce all dropped in price over the year.
Of the 31 items in the basket, prices rose for 14 in April compared with 10 in March and declined for 16. The price for one
item – beer – was unchanged. In the last year through prices increased for 19 items – down from 21 from March 2008 to March
2009. Prices dropped for nine items and were unchanged for apples, bananas and spaghetti.
Several factors – including rising energy costs – contributed to the increase in prices. Energy affects food prices in two
ways: in addition to transportation expenses, fertilizer prices are affected by energy adding to the cost of crops. Farmers
too have shifted patterns by concentrating on crops with greater yields rather than rotating grains. The consequence though
is an increased need for fertilizer to replenish soil nutrients.
Farmers too have been pinched by the credit crunch and global economy. The increase in the value of farmland has slowed adding
to credit costs and demand has slowed as the recession spreads.
One bright spot according to the Department of Agriculture is that the “Index of Prices Paid for Commodities and Services,
Interest, Taxes, and Farm Wage Rates” (PPITW)
was unchanged from March which kept food prices from rising even faster.
Mark Lieberman is the senior economist for the Fox Business Network. Prior to joining FOX, he served as first vice president and manager of economic analysis and research at Washington Mutual in New York. Before that, he served as senior vice president at Dime Savings Bank of New York (which was later acquired by Washington Mutual), where he specialized in credit and risk management. He is a member of the Executive Committee of the New York Association for Business Economics. He has a degree in Economics from the Wharton School of the University of Pennsylvania.






