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Retail staple food prices rise in first quarter

Retail food prices at the supermarket increased during first quarter 2011, according to the latest American Farm Bureau Federation Marketbasket Survey.

The informal survey shows the total cost of 16 food items that can be used to prepare one or more meals was $49.07, up $2.10 or about 4 percent compared to the fourth quarter of 2010. Of the 16 items surveyed, 13 increased, two decreased and one remained the same in average price compared to the prior quarter. The total average price for the 16 items was up $3.53 (about 8 percent) compared to one year ago.

Shredded cheddar cheese, vegetable oil, ground chuck and flour increased the most in dollar value compared to fourth quarter 2010. Together, these four items accounted for the majority of the quarter-to-quarter increase; shredded cheese increased 47 cents to $4.63 per pound; vegetable oil increased 29 cents to $2.88 for a 32-ounce bottle; ground chuck increased 27 cents to $3.10 per pound; and flour increased 52 cents to $2.51 for a 5-pound bag.

Other items that increased in price since the fourth quarter were boneless chicken breasts, up 22 cents to $3.32 per pound; orange juice, up 17 cents to $3.14 for a half-gallon; toasted oat cereal, up 17 cents to $3.05 for a 9-ounce box; Russet potatoes, up 14 cents to $2.64 for a 5-pound bag; bread, up 13 cents to $1.88 for a 20-ounce loaf; whole milk, up 11 cents to $3.46 per gallon; sliced deli ham, up 7 cents to $4.91 per pound; eggs, up 2 cents to $1.62 per dozen; and sirloin tip roast, up 1 cent to $3.96 per pound.

"Home cooks shopping for staples to make their favorite shepherd's pie or chicken pot pie recipe will definitely leave the grocery store with lighter wallets this quarter," said John Anderson, AFBF economist. "As anticipated, the increased consumer demand for meats and dairy products that began in 2009 and continued through 2010 remains evident as we look forward to the middle of 2011."

Most items showing an increase in retail price from quarter-to-quarter also showed year-to-year increases. Compared to one year ago, ground chuck was up 18 percent, potatoes were up 17 percent, chicken breasts were up 13 percent and flour was up 11 percent.

"Retail price increases for some foods are likely to continue throughout the year, as it takes time for farmers to increase the size of their herds to accommodate increased demand," Anderson explained.

Although bacon dropped 46 cents per pound (to $3.86) compared to the last quarter of 2010, it was 20 percent higher than a year ago. Bagged salad dropped 3 cents to $2.66 for a 1-pound bag compared to the prior quarter and Red Delicious apples remained the same in retail price from quarter-to-quarter, $1.45 per pound.

The year-to-year direction of the marketbasket survey tracks with the federal government's Consumer Price Index (www.bls.gov/cpi) report for food at home. As retail grocery prices have increased gradually over time, the share of the average food dollar that America's farm and ranch families receive has dropped.

"In the mid-1970s, farmers received about one-third of consumer retail food expenditures for food eaten at home and away from home, on average. Since then, that figure has decreased steadily and is now about 16 percent, according to the Agriculture Department's revised Food Dollar Series," Anderson said. USDA's Food Dollar Series may be found online at www.ers.usda.gov/Data/FoodDollar/app.

Using the "food at home and away from home" percentage across-the-board, the farmer's share of this quarter's $49.07 marketbasket would be $7.85.

AFBF, the nation's largest general farm organization, has been conducting the informal quarterly marketbasket survey of retail food price trends since 1989. The mix of foods in the marketbasket was updated during the first quarter of 2008.

According to USDA, Americans spend just under 10 percent of their disposable annual income on food, the lowest average of any country in the world. A total of 71 shoppers in 29 states participated in the latest survey, conducted in February.

For first quarter 2011, shoppers reported the average price for a half-gallon of regular whole milk was $2.25, up 1 cent from the prior quarter. The average price for one gallon of regular whole milk was $3.46, up 11 cents. Comparing per-quart prices, the retail price for whole milk sold in gallon containers was about 25 percent lower compared to half-gallon containers, a typical volume discount long employed by retailers.

The average price for a half-gallon of rBST-free milk was $3.23, up 13 cents from the last quarter, about 40 percent higher than the reported retail price for a half-gallon of regular milk ($2.25).

The average price for a half-gallon of organic milk was $3.70, up 10 cents compared to the prior quarter--about 60 percent higher than the reported retail price for a half-gallon of regular milk ($2.25).

Compared to a year ago (first quarter of 2010), the retail price for regular milk in gallon containers was up about 3 percent while regular milk in half-gallon containers was unchanged. The average retail price for rBST-free milk decreased about 10 percent compared to the prior year while organic milk was up about 1 percent.

For first quarter 2011, the average price for one dozen regular eggs was $1.62. The average price for a dozen "cage-free" eggs was $3.20, nearly double the price of regular eggs. Compared to a year ago (first quarter 2010), regular eggs decreased 7 percent while "cage-free" eggs increased 10 percent.

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