Food prices drop for third consecutive quarter

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Retail food prices at the supermarket are down about 2 percent from the first quarter of 2009, marking the third consecutive quarter of declining prices.

An informal survey by the American Farm Bureau estimated the cost of 16 food items used to prepare a meal was $46.29, down $1.12 from the first quarter of 2009.

Of the 16 items surveyed, 10 prices decreased, five increased and one remained the same compared to last quarter.

Russet potatoes, boneless chicken breasts, eggs, sliced deli ham and whole milk accounted for the most decrease of the overall price in food.

Other items that decreased in price were ground chuck, sirloin tip roast, flour, bacon and toasted oat cereal.

“The quarter-to-quarter price decline reported by our volunteer shoppers indicates that consumers are seeing some relief at the grocery store,” said AFBF Economist Jim Sartwelle. “Even more significant is that average retail prices for eggs, milk, chicken breasts and bacon for the second quarter of 2009 are significantly lower than a year ago.”

Overall, the average price of food declined about 6 percent during the year.

“The foods that declined the most in retail price are among the least-processed items,” he said. “When wholesale prices paid to producers for minimally processed foods such as these decrease drastically, consumers typically benefit fairly quickly from retail price reductions.”

Bagged salad, shredded cheddar cheese, apples, vegetable oil and orange juice went up in price, while white bread remained the same in price.

The Farm Bureau’s survey tracks with the federal government’s May 2009 Consumer Price Index report for all food – which showed a decline for the fourth consecutive month.

But the news isn’t good for everyone. The share of the average food dollar that America’s farmers receive has dropped.

“Starting 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,” Sartwelle said. “That figure has decreased steadily over time and is now just 19 percent.”

Using that standard, farmers receive $8.80 for the $49.29 spent at the supermarket.

Americans spend just 10 percent of their disposable annual income on food, the lowest average of any country in the world.