toledoblade.com --

IF IT FEELS like you are spending more for groceries but bringing home less, you are.

Food prices have been on the increase, numerous government studies have found, but a Blade visit to Toledo-area grocery chains last week to check prices on milk, bread, eggs, coffee, and 11 other food staples revealed a 16 percent increase from a similar survey five years ago.

The largest jump was for eggs, from $1.12 on average in 2003 to $1.98 now. Kroger, Meijer, and Giant Eagle were among the groceries checked.

"They've really gone up, haven't they?" said Stephen Breech, a grocery industry consultant and former chief executive officer of the now-defunct Big Bear grocery chain in the Columbus area.

"I think it's just beginning to scratch the surface. You can't do what Uncle Sam's done with the energy policy and this ethanol thing and not have an impact on our food."

Checked were milk, margarine, eggs, apples, lettuce, potatoes, ground chuck, fresh chicken, bread, corn flakes, cookies, coffee, apple juice, soup, and Coca-Cola.

Using an average of prices found at area stores, those items collectively cost $28.48 five years ago and $32.93 last week. Posting the biggest increases, besides eggs, were bread, 64 percent; fresh chicken, 54 percent; and ground chuck, 41 percent.

However, some items dropped in price, such as chicken noodle soup, down 19 percent; cookies, 12 percent; and margarine, 8 percent.

The foods checked locally were basic items and don't count the specialty flavors and packaging of many grocery products which have grown in popularity and price from five years ago.

Prices for many of the basic items have increased nationally. A 20-ounce loaf of bread has jumped to $1.60 from $1.30 five years ago; milk has risen to $3.87 a gallon from $2.69; and a dozen eggs have climbed to $2.18 from $1.18, according to the national Consumer Price Index.

It would be easy for consumers to think that the higher prices are simply the grocery industry trying to increase profits, but such is not the case, Mr. Breech said.

The increases stem, in part, from higher prices for corn and wheat, which are used as feed for meat and poultry and as ingredients in many processed foods.

Increased use of corn in ethanol, an alternative vehicle fuel, means less is going into the food supply.

In addition, because prices paid to farmers for corn have risen, many farmers have decided to plant corn instead of wheat, raising prices for both those grains. Shortages in Australia and elsewhere have pushed prices up for American farm goods.

Matt Roberts, an agricultural economist at Ohio State University, said the higher food prices also are the result of a weak U.S. dollar, which gives foreign countries more buying power of American foods. That boosts demand and drives prices up.

Higher energy prices also are affecting food prices. Mr. Roberts said that for every $1 Americans spend on food, 20 cents makes it to the farmer.

Wheat shortages, resulting in higher costs for flour, have driven bread prices up 64 percent. Higher flour prices are hurting many retailers, including pizza makers, sandwich and bagel shops, and bakers.

"You don't see Kroger or Meijer or Giant Eagle announcing they've had the best quarter they ever had like Exxon," Mr. Breech said.

Dale Hollandsworth, a Kroger spokesman, said a typical store operates with a 1 to 1.5 percent profit margin, and that hasn't changed for many years.

The company continually tries to boost profits, but, he added, "You do not find grocery stores just increasing prices to increase prices. They are always preceeded by a wholesale change in price at the commodity level."

Mr. Breech said that several years ago the grocery industry took all the fat it could out of its stores.

Overhead is lower, self-checkout lanes have been added, and employee rosters have been cut.

The wheat shortage could reverse itself in six months with an end to the drought conditions in other countries and with more acres planted with the crop, Mr. Roberts said. Maumee agribusiness The Andersons Inc. recently told Wall Street analysts that, based on initial surveys of farmers, it expects a higher wheat harvest this fall.

Corn prices are another matter. They aren't likely to come down soon, Mr. Roberts said, because of demand for corn for food and for its value as a source of ethanol.

Corn prices affect those for meat, poultry, and eggs because chickens and cattle eat corn. Corn also is processed into various foods as an additive or sweetener.

Ryan Mathews, of Black Monk Consulting, a Royal Oak., Mich., grocery industry firm, said Toledo-area customers have fewer grocery competitors, so price cuts are lessened.

In 2003, Food Town and Farmer Jack competed with Kroger, Meijer, and Giant Eagle. "So what you had then was prices were artificially low to start with and now they have floated back up," Mr. Mathews said.

In the short term, he added, there's not much chance for prices overall to decline locally.

Toledo-area shoppers may see lower prices coming on store-brand products, Mr. Mathews said.

Mr. Breech said consumers should watch advertisements for prices, use coupons, pounce on loss-leader items, and shop more than one store if it's convenient.

Another way to save, he said, is cut down on prepared foods. "We spend an awful lot on something that we pay someone else to prepare. You might be able to prepare it yourself and save yourself a buck or two."

Contact Jon Chavez at:
jchavez@theblade.com
or 419-724-6128.

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