Dairy, Meat and Produce Push Grocery Prices Higher

If it seems like your grocery bill is rising, it is.

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Citigroup reports that December "food at home" inflation rose 168 basis points from the year before, a slower rise than November but still the second highest jump since April 2009.

The government, and many analysts, believe food inflation will rise as much as three percent this year, with the highest jumps in dairy products, meats, produce, and eggs. In other words, just about everything.

Analyst Andrew Wolf at BB&T Capital Markets expect retailers to pass their costs through to shoppers very slowly over the next two to three quarters. "Industry demand is actually rebounded," he says.

However, if food inflation hits five percent, as some believe, "Then you've got a real problem. Then you can start to see some real sticker shock, and the consumer begins to re-evaluate where they want to shop."

How much have prices gone up? Real Simple magazine in October 2009 listed the average prices of five items at six major chains: a gallon of 2 percent milk, a dozen large eggs, a pound of unsalted butter, a pound of Red Delicious apples, and a loaf of store-brand wheat bread.

Last week, I went to all six chains to see where prices for those same items are now. In each case, I chose the best deal, the cheapest brand. It's not a pure apples to apples comparison, as Real Simple was giving national averages and all of my prices were in Southern California (where prices are often cheaper due to reduced transportation costs).

Here's what I found for the total cost of those five items compared to 15 months ago:

  • Kroger (Ralphs)
    Oct 2009: $10.35
    Jan. 2011: $13.75 (up 33 percent)
    With store loyalty card: $10.66
  • Safeway (Vons)
    Oct. 2009: $10.65
    Jan. 2011: $13.55 (up 27 percent)
    With store loyalty card: $12.35
  • SuperValu (Albertsons)
    Oct. 2009: $11.90
    Jan. 2011: $14.55 (up 22 percent)
    With store loyalty card: $12.75
  • Wal-Mart
    Oct. 2009: $9.55
    Jan. 2011: $10.29 (up 8 percent)
  • Trader Joe's
    Oct. 2009: $11.15
    Jan. 2011: $12.34 (up 11 percent)
  • Whole Foods
    Oct. 2009: $14.35
    Jan. 2011: $13.15 (down 8 percent)

Yes, you read that right. Whole Foods prices for these items have actually dropped.

One other note, the loyalty card prices for Safeway and SuperValu included a discount on milk that only counted if you bought two gallons, and I only included the price of one gallon here.

The biggest gainer? Butter, up at least a dollar a pound. I can't believe it's not...cheaper.