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Arizona bucks national food inflation trend in third quarter

by Chris Hinyub, published

Retail food prices at Arizona supermarkets were down in the third quarter according to the Arizona Farm Bureau Federation's Market Basket Survey. The informal survey averages the cost of 16 basic grocery items from retailers around the state providing a gauge for price trends.


In Arizona, these items totaled $50.71, down $.60 or about 1 percent below the second quarter of 2011. By comparison, the American Farm Bureau Federation's national survey found third quarter prices on those same items averaging $53.12, up 4 percent from the second quarter.


Year over year, it was found that food prices continue to climb. In fact, this time last year the Arizona third quarter Market Basket was 9 percent cheaper.  8 of the 16 items in the Arizona Market Basket Survey increased in price from the 2011 second quarter survey, while the other eight decreased. For the national survey, 13 of these items increased in price, two decreased and one stayed the same. Items that are now more costly in Arizona include milk, apples, flour, bread, oat cereal, sliced deli ham, shredded cheese and ground chuck. Lower off-the-shelf prices for bacon, eggs, sirloin tip roast, boneless chicken, bagged salad, vegetable oil, orange juice and russet potatoes helped to completely offset those increases.


“At the beginning of 2011, a number of factors including growing global demand for food pointed to continued increases in retail food prices, especially for meats. Interestingly, Arizona’s third quarter food prices are slightly lower than the nationwide survey,” explains Julie Murphree, Arizona Farm Bureau Director of Public Relations, Marketing and Ag Education.


With a competitive grocery industry and year-round growing seasons, Arizona might be shielded from the complete impact of extreme weather conditions that are helping to drive up food costs around the nation, says Murphree.


The Farm Bureau cited high diesel prices as the main culprit behind upward pressure on retail food prices this year. Two of the biggest contributing factors for food inflation, outside the weather, are rising energy and labor costs. Murphree says that increasing farm efficiency will be the only thing farmers can do to help stabilize grocery store prices.


When he analyzed the Market Basket Survey together with USDA statistics, American Farm Bureau Economist John Anderson identified another economic threat connected to food inflation. Even while grocery prices increase gradually over time, the share of the average food dollar that America's farm and ranch families receive continues to go down, says Anderson.


“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. That figure has decreased steadily and is now just 16 percent, according to the United States Department of Agriculture’s revised Food Dollar Series Department statistics,” explains Anderson.


That means that of this quarter's $50.71 Market Basket total, the Arizona farmer's share would be just over $8.

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