Food prices stabilize after last year's increase

BY KYLE ARNOLD Modified: June 30, 2012 at 12:35 am •  Published: July 1, 2012

Sand Springs pecan grower Mike Spradling is thankful that his biggest worry these days is the rain.

Gas prices show little threat of jumping to $5 a gallon, demand for commodities are strong and other input costs are giving Oklahoma farmers and ranchers a chance to plan ahead without the fear that's permeated the past five years.

Of course there's little chance that farmers will ever stop worrying about rain, but food producers, retailers and consumers should be relieved by the newfound stability in the grocery marketplace.

It's nice, Spradling said, to be worrying about things like the weather again.

For the first time since the Great Recession started in 2007, shoppers, supermarket owners and economists are observing that food inflation for groceries is following a healthy and predictable course, increasing 2.7 percent between May 2011 and May 2012, according to the Consumer Price Index.

Food has been on a wild ride since 2007, when high fuel prices hiked consumer prices before the oncoming economic uncertainties further disrupted the global food supply chain. In 2009, shrinking consumer spending sent prices for all products, especially food, plummeting before prices rose sharply again in 2011 as the worldwide economy began improving.

“This all puts a lot of strain on the food production process,” said John Anderson, deputy chief economist for the American Farm Bureau Federation. “Part of what we saw in the last couple of years was prices adjusting after some fairly substantial supply adjustments and changes in demand.”

It's true that some grocery items have gone up significantly during the past year, including beef, which has seen about a 10 percent increase in prices since a year ago. Last year's dismal peanut harvest increased costs substantially for peanut butter.

But on the other end of the spectrum, fruits and vegetables are down slightly, and the overall inflation rate for meats, including beef and chicken, are exactly in line with the overall food-at-home rate at 2.7 percent.

Economists say that's great news for the entire food industry, from shoppers and supermarkets to manufacturers and farmers.

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