Be thankful for lower food prices this holiday season Food prices drop, for now

As long and costly as that Thanksgiving grocery receipt may look, be thankful. Last year, food cost much more, and next year prices will probably rise back up.

For a brief window, we're living in a remarkably cheap moment in grocery shopping.

A general drop in fuel prices and the awful economy have done wonders to push down prices on the basics: meat, eggs, dairy, produce and cereals. Food-price inflation is below the previous year's rate, "a phenomenon that has not been seen in 42 years," notes a report by the U.S. Department of Agriculture.

That will be important this coming week, as the days leading up to Thanksgiving are as big in the grocery stores as Black Friday is in the malls.

"Thanksgiving is the No. 1 biggest time for food buying of the year," said Geoff Waldau, vice president of merchandizing for Sweetbay Supermarkets. "This year, we've seen some good drops in prices and some stability."

But brace yourselves, shoppers. All those prices will likely reverse course and start rising in 2010.

Cheaper gas, cheaper food

A drop in fuel prices this year has helped farmers produce food more cheaply. (Think about all the trucks, plows and harvesters that run on diesel fuel.) That has helped grocery companies pay less to truck food. Also, those stores have felt the economic pressure as suddenly frugal consumers aggressively bargain-hunt and pick less-expensive store brands.

Those forces add up. For the moment, milk prices are down more than 18 percent compared with autumn 2008, according to grocery price tracking by The Nielsen Co. That has helped pull cheese prices down 14 percent.

Beef, pork and poultry prices are down, too, according to the Department of Agriculture. Fresh produce is down almost 9 percent and juice 8 percent, and even wrapping materials and bags are down 8 percent, according to Nielsen.

The award for biggest price drop goes to eggs, down 18.6 percent this year. That's after a 14 percent increase in 2008 and a 29 percent increase in 2007.

For the holidays, turkey prices are significantly lower. Case in point: Sweetbay's turkey prices are down almost half, to 49 cents a pound, compared with last year, and Walmart's price is 40 cents a pound for some varieties. And for fans of spiral-cut honey ham, prices are down 6.5 percent.

Pivot point

Local prices the past two months show some expected seasonal swings.

Strawberry prices are up 38 percent on a 16-ounce box, according to a market basket price check of five major supermarket chains by The Tampa Tribune. Tomato prices, however, are down 26 percent.

When the season shifts next year, the strawberry and tomato price trend probably will be reversed.

For the past two months, prices have been stable on items such as bread, pasta sauce, peanut butter, eggs and orange juice, which all showed no more than a 3 percent swing in the Tribune's market basket since September.

Next year not as promising

Prices may begin to pivot in a direction shoppers won't like during the holiday season.

Milk prices have flattened and started to creep upward, with the average gallon price around $3.03 among five local chains, up about 8 percent since Sept. 10. Prices also are eking up on coffee, spaghetti, lettuce, bacon and sugar, according to the Tribune's market basket data.

The USDA consumer forecast for next year doesn't look good, either.

Over the next several years, livestock producers will continue to deal with high feed prices and will push up prices, USDA analysts say.

The agency forecasts that food prices will go from falling in 2009 to rising in 2010 by 2.5 percent to 3.5 percent, with big jumps in cooking oil, seafood, cereals, nonalcoholic beverages, eggs, dairy and meat. Fresh fruit prices may go from falling about 2 percent in 2008 to increasing 3 percent to 4 percent in 2010. Sugar prices will continue a general increase to 4.5 percent.

Much of this depends on the economy. In the view of the USDA, "once the world economies recover from the current slowdown, steady economic gains support increases in consumption, trade and prices."

All in all, food prices likely will increase faster than the general inflation rate through 2011.

One final bit of news: Sweetbay officials note the prices of liquor and wine are sharply down from 2008.