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Retail Food Prices Dip Slightly in Fourth Quarter

Retail prices for food at the supermarket dropped just over 3% in the fourth quarter of 2005, according to the latest American Farm Bureau Federation Marketbasket Survey. The informal survey shows the total cost of 16 basic grocery items in the 2005 fourth quarter was $38.83, a decrease of $1.13 from the 2005 third quarter survey average of $39.96. The cost of the marketbasket items was down 4 cents from a year ago.

Of the 16 items surveyed, nine decreased and seven increased in average price compared to the 2005 third quarter survey.

Corn oil showed the largest decrease, down 27 cents to $2.67 per 32-oz. bottle, followed by cheddar cheese, which dropped 26 cents down to $3.39 per pound, and mayonnaise, which dropped 25 cents to $3.06 per 32-oz. jar.

Other items that decreased in price:

• Pork chops, down 24 cents per pound to $3.24;

• Toasted oat cereal, down 17 cents per 10-oz. box to $2.87;

• Ground chuck, down 14 cents to $2.54 per pound;

• Flour, down 13 cents to $1.56 per 5-pound bag;

• Vegetable oil, down 10 cents to $2.45 for a 32-oz. bottle; and

• Apples, down 2 cents per pound to $1.07.

Items that increased in price from the third quarter of 2005 were: sirloin tip roast and bread, which each increased by 11 cents to $3.65 per pound and $1.40 per 20-oz. loaf respectively; potatoes, which increased by 7 cents to $2.30 per 5-pound bag; whole chicken fryers and bacon, which each rose by 5 cents to $1.24 and $3.12 per pound, respectively; and eggs and milk, which each rose by 3 cents to $1.10 per dozen and $3.17 per gallon, respectively.

"Although there has been some small quarter-to-quarter variation, food prices as reported in the marketbasket survey have been stable for the past two years," says AFBF Senior Economist Terry Francl. "Perhaps more interesting is what has not happened over the past quarter," says Francl. "The sharp spike in energy prices in the third quarter of 2005 does not appear to have been transferred to the food sector at this time. While higher energy prices may yet work into food prices in the first half of 2006, it now appears that they will have only a small impact."

The share of the average food dollar that America's farm and ranch families receive has dropped over time, despite gradual increases in retail grocery prices. "Looking back 30 years, farmers received about one-third of consumer retail food expenditures. That figure has dropped steadily over time and is now just 22%, according to USDA statistics," Francl says.

Using that percentage across-the-board, the farmer's share of this quarter's $38.83 marketbasket total would be $8.54.