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The Herald of Everett, Washington
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Published: Sunday, June 15, 2008, 12:01 a.m.

Gas, grocery prices drive cost of living up

  • List in hand, Cheryl Buck stocks up on soda at the Albertsons store in Lake Stevens.

    Jennifer Buchanan / The Herald

    List in hand, Cheryl Buck stocks up on soda at the Albertsons store in Lake Stevens.

  • Buck spent just more than $138 during a recent shopping trip to Albertsons in Lake Stevens. Using a club card and lists from the Grocery Game Web site...

    Buck spent just more than $138 during a recent shopping trip to Albertsons in Lake Stevens. Using a club card and lists from the Grocery Game Web site, she saved $165.61.

All of us have to eat and most of us have places to go.
But those two basic staples of modern American life -- food and fuel -- suddenly cost much more than they did a year ago.
The total cost for a grocery basket of a dozen common food items costs an average of 15 percent more than a year ago, according to The Herald's price checks at local stores.
In April, nationwide food prices took their biggest one-month leap in 18 years. Even after a more moderate rise in May, food costs are rising at a rate of 6.3 percent so far this year, according to the U.S. Labor Department. But some individual items have soared well above that.
At local gas stations, the cost of regular unleaded fuel has increased 30 percent from a year ago. Diesel is up double that.
It's enough to make everyone more interested in pinching pennies.
Cheryl Buck of Lake Stevens said she's too busy to run around to different supermarkets in order to catch the best prices every week.
"And who has time to clip all those coupons?" she asked.
But with rising prices, the real estate agent started looking for ways a few months ago to cut the grocery tab for her family of four. She now shops with weekly lists from The Grocery Game, a Web site that advises shoppers on how to get the best deals
"It's not being cheap; it's being smart," she said.
Walt Lasher also is tightening his budget belt. The Everett retiree said he has become a dedicated bargain hunter to make his fixed income go further.
He hops several supermarkets to snap up the loss leaders, those blowout deals stores use to entice customers.
"I have to balance it though. I don't normally go to the store if there is just one thing, unless I plan to buy several," he said, noting that high diesel prices have curtailed his desire to drive any great distance for a deal.
More and more people are likely to become serious about saving on their shopping. That's because economists say that even if food and fuel prices level off soon, they're not likely to return to the same levels of a year ago.
"It's a bit of a perfect storm for many families," said economist Jared Bernstein. "You don't have to lose your job or have this labeled as a recession to feel pinched."
Bernstein, who works at the Economic Policy Institute in Washington, D.C., discusses the nation's feeling of economic insecurity in his new book "Crunch."
Throughout much of the past 20 years, inflation has stayed in check, most home values have risen and the economy had suffered only minor bumps.
Many under 45 years old weren't buying the groceries the last time, more than 25 years ago, that consumer prices spiraled out of control.
"The inflation rate now is nothing like we've seen in the distant past," said Dick Conway, a Seattle-based economist. He said the Puget Sound area's consumer price index jumped nearly 17 percent in 1980 and 11 percent the following year.
This year, even with soaring prices for some basics, the regional price index is on track to rise about 4 percent to 5 percent, Conway said. The average rise in wages across the state last year was comparable to that.
But when combined with other rising costs, such as health care, this year's increases are a jolt after years of relatively steady prices, Conway said.
"Obviously, food and fuel are causing that to be relatively high," he said.
Food depends on fuel
Food and fuel aren't just the most noted examples of inflationary prices. The price increase in fuel is partly to blame for the higher cost of food and other products.
When oil and gasoline prices last set all-time records, in the 1970s and early 1980s, the increases were directly the result of the OPEC oil cartel flexing its newly found economic muscles and Middle Eastern-U.S. political conflicts.
"I think this time, the natural of what's happening is different," said Ed Rice, an associate professor of economics at the University of Washington. "The change in demand for these resources is really driving the price changes this time."
As the middle class in China, India and other emerging nations grows, more people there are eating better. They're also driving more.
At the same time, the U.S. dollar is at a low versus world currencies, which makes oil on the world trading markets more expensive for us.
Add in the increase in speculative trading on commodities markets, a few natural disasters that have affected crops around the globe and a diversion of corn crops for use in ethanol and biodiesel production instead of food or animal feed.
The result is more expensive food and oil. And as oil and gasoline rise, so do transportation costs for getting all food and household items to the grocery store.
"There's numerous things affecting prices. We're trying to do everything we can to hold costs," said Becky Skaggs, spokeswoman for Bellingham-based Haggen Inc., which operates Haggen and Top Foods stores. She noted that grocery sellers typically can't eat too much of the increase, however, because the industry operates on thin profit margins.
In fact, said Alicia Rockmore, who has a background in the packaged goods industry and now offers money-saving advice, many supermarket chains have swallowed enough of the rise in their wholesale prices that the true increase in food costs hasn't hit most consumers. In other nations, consumers have seen much larger price jumps. In some developing nations, food riots have erupted in recent weeks.
Here, the signs of grocery bill distress have been more subtle, including a decline in business for most restaurants and higher demand at food banks.
More looking to save
For Teri Gault, the founder of The Grocery Game, it's meant more subscribers to her Web site, which she started in 1999.
"We've definitely had a lot more traffic and a whole lot more hits," said Gault, who claims the average shopper can cut their bills in half just by purchasing grocery items when they're on sale. Her Web site, for about $5 a month, provides weekly lists of advertised and unadvertised specials offered at large supermarket chains.
"Our approach is to buy everything on sale and stockpile it. You can stockpile just about everything but milk and a few other perishables," Gault said.
Buck shops early in the week to catch the best sales, always following her Grocery Game list. It works, she said, claiming she's saved thousands of dollars
For example, last week's total at the checkout at Albertsons: $138.32, not bad for enough food to feed a family of four for a week.
But the savings amount listed below the total was even better: $165.51.
So far, Buck's only investment besides the subscription fee to The Grocery Game has been in a low-cost storage freezer she got off Craigslist.org.
Lasher doesn't consult a Web site, but he has his own shopping strategies. He also stockpiles to take full advantage of sales, which means he often has several pounds of cheese in his refrigerator. Once, when one store put olives on sale for 59 cents a jar, he bought two cases.
He stores things such as cottage cheese and sour cream upside down in order to keep them fresh longer.
"Blocks of cheese, if unopened, will keep for more than a year," he added.
He also has found that some supermarkets have their lowest prices on meats on Mondays, Wednesdays and Fridays. That's when he buys.
Rockmore said there are basic steps any shopper can take, even if they don't have time for anything else, to realize at least a little savings in the grocery aisle.
"It's as simple as using your loyalty card and buying more basics," she said, explaining that more conveniently packaged or processed foods always are at a premium price compared to more basic or staple ingredients.
There are signs that some food prices may have peaked. After huge rises in wheat prices, for example, they have been headed downward, said Simon Constable, a correspondent for TheStreet.com. He said he sees a couple more years of relatively high food price increases here, but the U.S. Department of Agriculture predicts larger crops in the next year or two will catch up with demand.
"We won't be paying $25 for a loaf of bread, as some have predicted," he said.
Even if you're resigned to this period of rising prices, there's always a few items in the store that seem particularly overpriced. Buck had no trouble picking that out.
"Cereal. Cereal's just ridiculous," said Buck, who tries to snap up boxes when they're under $2 each.
With her long, savings-filled receipt in hand, Buck took her groceries out of Albertsons to load them in another recent purchase aimed at saving money: a Toyota Prius hybrid, which is averaging 50 miles per gallon. Her former vehicle was a much less efficient minivan.
"With the amount I've save on groceries and mileage, I figured it was about enough to pay for the car," she said.
Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.

Tracking prices

The Herald found in June 2007 that a selection of 12 common grocery items cost $40.21 at Albertsons, $42.93 at QFC and $43.10 at Haggen.

A year later, that same bagful of groceries costs an average of $46.84 at Albertsons, 16 percent more. At QFC, it's now $50.78, 18 percent more. At Haggen, the most expensive supermarket on average last year, the dozen groceries cost an average of $43.81, up just 2 percent, thanks to discounts on key items. Based on regular prices, Haggen would be up about 12 percent from last year.

Overall, between the three chains, the price of the average bag of groceries has increased a little less than 12 percent in a year.

Story tags » Food

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