Holiday food prices climb
Anna Boarini | Monday, November 21, 2011
Turkey, cranberry sauce and pumpkin pie are usually staples on a traditional Thanksgiving table.
However, Saint Mary’s economics professor Richard Measell said that table might look different this holiday for some American families due to the rising costs of food.
“We’re seeing higher prices generally in the economy, but food prices are going up higher than overall prices out there,” Measell said.
This year, inflation has increased at an annual rate of four percent, which is a higher rate than previous years, Measell said. However, food prices are increasing at a rate of six percent.
While food prices in the grocery store increase, Measell said the price of restaurant meals have not increased proportionally.
“Restaurant prices, however, have not been going up as much,” Measell said. “There is just more competition among restaurants than grocery stores. For restaurants, there [are] a wider variety of choices [than grocery stores] and the increased competition held food prices more in check.”
Measell said these prices are climbing for a number of reasons, including a rise in the price of corn, higher energy costs and greater global demand for food.
“The costs for farming [are] higher, and that is one thing that is passed along to the customers on the supply side,” Measell said. “And on the demand side, we have a stronger global demand for food.”
As the U.S. economy and other global economies pick up, Measell said the demand for food would continue to jump.
Measell said families could cut down on their Thanksgiving grocery bill by looking for store specials. A “loss leader,” for example, is a product that is lowered in price to encourage consumers to buy other goods. Thanksgiving staples like turkey could be loss leaders right now, he said.
“I don’t know if the stores actually sell them for a loss, but … this concept of loss leaders really helps you understand how they price things at this time,” he said. “You would think that at Thanksgiving, turkeys would be way more expensive, as opposed to less expensive. But they put them on sale, and it’s really interesting that stores know what customers want, and with competition, they charge the lower price of those items than what you would normally be spending.”
One Thanksgiving food that is inexpensive this year is sweet potatoes.
“I guess sweet potatoes are in great supply this year, and one local store is selling them for 25 cents a pound,” he said.
Resources like coupons and advertisements in the Sunday newspaper can help a consumer find the best prices on Thanksgiving, Measell said, adding that the financial strain of the holiday season might add to a family’s bills.
“Some people, especially at Christmas, will be willing to go into a lot of debt to make sure their kids have a good Christmas,” he said. “Sadly, they will rack up more debt than they can probably handle for their kids to have a good Christmas and will have to pay that off for the rest of the year.”
However, he said consumers would also need to make decisions about what their priorities are as food costs rise.
“People are going to become more cautions on how they spend their money, but [for] some people, it’s life,” he said. “Thanksgiving and Christmas are big times, and you don’t want to skimp at those. And I think that some people will maybe cut out other things to maybe have a better Thanksgiving and a better Christmas.”