Picking up Nickels

Tuesday, December 21, 2010

Grocery price inflation update

My how time flies... It's been about a year since my last grocery price inflation update.

It appears that the recession-induced 13.6% decrease in grocery spending I experienced through November 2009 was a temporary blip as I had speculated, as those savings have been virtually erased by the 13.0% increase in spending I have experienced through November 2010.

The slowdown of manufacturer/retailer promotions in the second half of 2010 has made great deals pretty much non-existent. I haven't had a good haul of free/cheap items that I'd actually want to buy for several months and high value coupons and rebates have continued to dry up (like the annual Kellogg's Fuel for School rebates good for 30+ boxes of free cereal every Fall). This trend was particularly evident during the Thanksgiving and Christmas shopping seasons, where baking items (flour, sugar, butter, chocolate chips, etc.) can usually be had quite cheaply, yet the supermarket sales seemed to only bring their prices in line with everyday prices that I see at Walmart year round.

Fortunately, one annual avenue for savings did not disappear in 2010: the tax-season 10% bonus for buying gift cards at Shaw's Supermarkets. While this deal has been around for three years now, I wouldn't be surprised to see it discontinued for 2011 since Shaw's parent company Supervalu has been hit with declining revenue of late.

All in all, I think we're looking at the pre-recession climb in grocery prices to resume and continue for the foreseeable future. Even though we're in a period of low inflation as far as the government is concerned, profits are down, commodity prices are rising, and one out of every ten people is unemployed. If the current situation continues, I figure that I will see another double digit increase in grocery spending for 2011, eclipsing the recent high water mark we established in 2008.



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