Food costs push higher due to energy, currency
Stars and Stripes June 17, 2007
What has four wheels, costs more to fill up today than it did a year ago, yet doesn’t cost a penny to operate?
Give yourself a pat on the back if you guessed a shopping cart.
U.S. food and beverage prices are up 5 percent from a year ago, according to a Bureau of Labor Statistics report released Friday.
And for Americans in Europe — where the Defense Commissary Agency buys some merchandise on the economy — food prices in general have risen even faster than they have in the U.S. because of the dollar’s feeble performance against local currencies.
While cost-of-living allowances cover those currency-related increases for many overseas Americans, nobody who shops the commissary is protected from U.S. inflation.
On a recent trip to the Mannheim, Germany, commissary, Stars and Stripes compared prices for a range of items identical to those purchased in August 2007.
The grocery list is by no means comprehensive or necessarily representative of what the average American family buys, but it nevertheless illustrates rising grocery price trends. All but three of the 19 items purchased are more expensive now than they were 10 months ago.
Dairy products and produce were the biggest sources of our inflating food bill. Vine-ripened tomatoes, which ran 70 cents a pound last August sold for $1.05 a pound Wednesday — a 50 percent increase. Sweet onions were up more than 25 percent. American cheese slices, which used to cost $1.89, are now $2.50. Soy milk, which was $2.21 for a half gallon, is now $2.89.
Bread, eggs and peanut butter showed some of the smallest price increases but were still noticeably more expensive than they were 10 months ago.
The three items on our list that didn’t increase were tortilla chips, frozen lemonade concentrate and tortillas.
All told, what cost us $36.63 in August rang up this time to $42.69 — an increase of 16.5 percent. However, the worsening exchange rate played a significant role in inflating prices for items the commissary buys locally, such as produce and meat.
Compared over the same time period, tomato prices in the U.S. were up about 19 cents — nearly 13 percent — according to the Bureau of Labor Statistics. The euro, which on the date of our last food purchase traded at less than $1.35, cost a fraction more than $1.55 this time around. Eggs in the U.S. are also more expensive, having climbed 30 cents to $1.63 on average since August. Ground beef is about 10 cents a pound more, and chicken about 5 cents more.
"In 2007, the Consumer Price Index for food in the U.S. increased by 4 percent. This was the largest annual increase in retail food prices since 1990," Joseph Glauber, chief economist for the U.S. Department of Agriculture told Congress’ Joint Economic Committee in May. He added that prices are expected to rise as much as 5 percent this year.
Tom Buis, president of the National Farmers Union, told the committee that while biofuels played some role in sending food prices higher, they aren’t as significant as skyrocketing oil prices, "the declining value of the U.S. dollar, increased demand from developing economies around the world, and worldwide weather-related production shortages, especially in wheat."
Recent flooding in Iowa, the biggest corn producer in the States, caused corn prices to bolt to new highs Monday. Prices for wheat and soybeans were also up.
While food price increases are nowhere near the increase in gas prices — Army and Air Force Exchange Service pump prices are up by about 44 percent since August — there is a crucial difference between gas and food.
"When gas prices are high, families may decide to drive a little less or carpool or take the subway," Sen. Charles Schumer, D-N.Y., said during the Joint Economic Committee hearing in May. "When food prices are higher, families can’t just decide to not feed their children."
Commissary officials were asked last week about their own rising costs, customer traffic, average grocery receipts and about rising prices at commissaries in Germany, the United Kingdom and Italy, but did not respond by deadline Monday.