FBN Shopping Cart Prices Rise in November
If you’re craving a bacon, lettuce and tomato sandwich, be prepared to dig deeper into your pocket to pay for it.
Higher prices for lettuce and tomato contributed to a 31-cent increase in the cost of the FOX Business Shopping Cart, raising the cost of the items in the basket to$71.62, the second consecutive monthly increase.
The month-over-month increase in the cost of all the items in the shopping cart outpaced the one-cent per hour increase in average hourly earnings in November. As a result, it took the average wage earner about a minute longer to earn the cost of the cart in November than in October, but 14 minutes less than it took in November 2008.
FBN calculates “minutes to earn” by dividing the cost of the basket by average hourly earnings as reported by the Bureau of Labor Statistics which also collects average price data in compiling the Consumer Price Index report.
Prices for meat and produce – hence the higher cost of a BLT – surged in November while the cost of dairy products fell as the aggregate cost of fun foods such as cola, chocolate chip cookies, peanut butter, potato chips and beer. The cost of grain products fell slightly.
While prices rose in November, the increase was relatively tame compared with the 50-cent increase from September to October.
Despite the November increase, the cost of the items in the cart is down 3.4%, or $2.50, from November 2008.
Experts at the Department of Agriculture suggested seasonal factors contributed to the sharp – 13 cent per pound – increase in the price of field-grown tomatoes to $1.73.
At the same time, demographics may be a factor. According to researchers Hayden Stewart and Gary Lucier, demand for fresh vegetables among younger consumers is down.
Using data from the Consumer Expenditure Survey, collected between 1982 and 2003, Stewart and Lucier determined “people born more recently are found to spend less money for fresh vegetables than older Americans do.”
Kids really do have to reminded to eat vegetables, they said.
“Unless something happens to alter how the current young make food choices,” Stewart and Lucier wrote, “they likely will exhibit a lower level of demand for at-home fresh vegetables in their later years than today’s older generations currently exhibit.”
There are eight produce items included in the FBN Shopping Cart. Prices increased for four an aggregate 46 cents, the aggregate decline for the other four produce items (bananas, grapefruit, frozen orange juice and potatoes) was 12 cents.
Meat products rose a combined 55 cents for the month with sirloin steak and round roast contributed 38 cents. According to the Department of Agriculture’s monthly “Livestock, Poultry and Dairy Outlook,” beef supplies are down from 2008.
“Total federally inspected cattle slaughter has remained below year-earlier levels for most of 2009, with year-to-date estimated cumulative slaughter running almost 4% below 2008 levels,” the report said.
Grain products, which inched up generally in November, were, according to the Federal Reserve’s Beige Book report, affected by the weather.
“Excessively wet conditions during October and early November were reported in a number of [Federal Reserve] Districts,” according to the Beige Book. “As a result, the fall harvest was delayed in many parts of the Richmond, Atlanta, Chicago, St. Louis, Minneapolis, and Kansas City Districts. Flooding from Tropical Storm Ida and a November ‘noreaster’ damaged crops and delayed planting throughout the Richmond District."
The Beige Book also noted “corn and soybean prices rallied over the past month.” Written from the perspective of farmers, that means prices rose.
Some items in the FBN shopping cart – beer, chocolate chip cookies and ice cream – fell from record highs in October. The price for a half gallon of ice cream, for example, dropped 19-cents or 4.2% in November. After jumping 16 cents per pound in October -- the largest increase since June 2006 – the price dropped 9 cents in November.
Prices rose in November 13 of the 31 items in the FBN shopping compared with 15 in October.
As to that BLT, the cost of a pound of bacon and the cost of a pound of white bread declined in November, but by less than the increases in lettuce and tomatoes. You might want to consider a grilled cheese sandwich: the cost of a pound of American cheese dropped in November — the eighth month-over-month decline this year.
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.
Follow Mark on Twitter at foxeconomics: http://twitter.com/foxeconomics