Grocery Prices Have Been Falling. Did You Notice? : The Salt For 19 months in a row, food prices in America's supermarkets fell compared to a year earlier. This is good news for shoppers but has weighed on the grocery industry and the people who grow our food.
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Grocery Prices Have Been Falling. Did You Notice?

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Grocery Prices Have Been Falling. Did You Notice?

Grocery Prices Have Been Falling. Did You Notice?

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  • <iframe src="https://www.npr.org/player/embed/547820236/548819289" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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RACHEL MARTIN, HOST:

You may have noticed over the past year or so that food prices at supermarkets have been lower than they used to be. That's been great for shoppers, not so great if you are a grocer or a farmer. NPR's Alina Selyukh reports on the causes and effects of the long stretch of low food prices.

ALINA SELYUKH, BYLINE: U.S. food prices have just been through the longest period of deflation in about 60 years. But if you're like the dozen grocery shoppers I interviewed this Harris Teeter in Washington, you're probably thinking...

MICHELLE GERMAN: Are you serious? Really?

SELYUKH: That's Michelle German. And, honestly, her reaction was by far the most common, until I met Joe Bontke.

JOE BONTKE: I will say this. I have noticed beef prices. I buy large briskets for a cooking ministry that I run, and they are at the lowest they've been in a while.

SELYUKH: In fact, beef, dairy and especially eggs saw some serious drops over the course of 2016. That's according to year-to-year price changes tracked by the government.

BRIAN TODD: It is rather a unique period, something certainly I've never seen in my 37 years.

SELYUKH: Brian Todd studies food prices and trends the research group called the Food Institute. He says the last time we saw such a long decline of prices compared to a year earlier was in the 1950s. And, typically, food prices fall when the economy's weak, but that's not been the case for a while. So what happened this time?

TODD: It was kind of everything (laughter) hitting at the same time.

SELYUKH: Cost of energy and transportation got lower. China started buying less American food. So did other countries, partly because it got more expensive as the dollar got stronger. At the most basic, it came down to supply and demand. People weren't buying as much beef and eggs as farmers and ranchers were producing.

(PHONE RINGING)

MERRI POST: Hello?

SELYUKH: I reached Merri Post in southwest Minnesota, where she and her husband, Bill, run a dairy farm. Their milk goes into making cheddar cheese.

POST: We produce over 10,000 pounds of milk a day.

SELYUKH: This is their lifeblood. They actually live on the same farm where Bill grew up, and Post says sometimes, like when milk and feed prices stay low and there is a glut, a farmer may work at a loss.

POST: There are times you know that that day, for that month, you're maybe writing a check for the privilege to go milk your cows. You're not making money. (Laughter).

SELYUKH: I read these stories of dairy farmers pouring excess milk onto fields.

POST: Yes. In Michigan. We aren't at that, although our creameries are full. They can't take on more milk.

SELYUKH: And it's not like we all stopped eating cheese all of a sudden.

POST: Our consumption is actually pretty good in the U.S., but there's no way they can eat enough cheese and ice cream to use everything we produce, although I'd like to sure see them try.

SELYUKH: Good news for Post - the dairy price index is slowly starting to tick up along with many other foods. So what about grocery price tags?

JON SPRINGER: They will gradually go up.

SELYUKH: Jon Springer is the retail editor at Supermarket News.

SPRINGER: One of the big questions is sort of how fast the retailers will enact their own price increases, right? Because they've got to keep an eye on one another because nobody wants to look like they're more expensive than the other guy.

SELYUKH: The price wars among grocery stores have been intense. Wal-Mart, Kroger, now Amazon have been fighting for the lowest prices around. Even the typically upscale Whole Foods last week lowered prices for organic baby kale. The Food Institute is predicting that overall, prices this year compared with last year will be higher by only about 1 percent. Alina Selyukh, NPR News.

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