Backyard barbecues will cost more this summer than a year ago.
Consumers in New Jersey and other parts of the Mid-Atlantic region are paying as much as 22 percent more now for some popular food items than a year ago, according to the Consumer Price Index.
Prices have crept up gradually since April 2011, making it harder for consumers to notice changes week over week, said John Anderson, a senior economist with the American Farm Bureau Federation.
“We’re continuing to see meat prices increase. That’s what really jumps out,” he said.
Anderson said it takes longer for ranchers to react to market changes in demand because cows take a long time to grow into rib-eye.
Extra-lean ground beef is up 13 percent, roast beef is up 6 percent, sirloin steak is up 7 percent and chuck roast is up 5 percent.
Consumers are paying more for other foods as well: eggs, bacon, fresh chicken, pork and frozen turkeys are all up significantly over last year.
“We knew we’d see food-price increases last year and we got that in line with expectations,” Anderson said.
Grocery prices in southern New Jersey are up about 4 percent over last year while restaurant prices are up about 2 percent, according to federal statistics.
John Louderback, owner of Gaiss’ Meat Market in Lower Township, said prices fluctuate from week to week.
“I just react to it. Every week I place my orders and set my prices accordingly,” he said. “Even if I knew something was going up, I don’t have a lot of space for inventory.”
Louderback said customers notice when prices change in either direction. Prices over holiday weekends typically increase with demand before dropping again — a helpful hint for people planning to host parties for Labor Day or the Fourth of July.
“My suppliers are generally smaller. If one of my suppliers buys a trailer load of cheese, I can enjoy that price for some time. Because he’s not selling to supermarkets, he doesn’t offload it as quickly,” he said. “For us, that’s sometimes a little insulating. Other times it’s the exact opposite.”
Price fluctuations are especially apparent to companies that buy in bulk such as Formica Brothers Bakery in Atlantic City.
Most bakeries buy flour in 100-pound bags, said Michele Giampaolo, marketing and sales director. But Formica Brothers needs so much each day that it gets deliveries by truckloads that get pumped directly into a special silo on the bakery floor.
Consumer flour prices are up 9 percent from last year, federal numbers show.
“We are sensitive to that,” Giampaolo said. “It’s something we monitor very closely.”
Formica makes 35,000 to 50,000 pieces of bread every day from dinner rolls to hamburger buns to dozens of different kinds of bread loaves.
The company distributes its fresh-baked bread to 400 wholesale customers in Atlantic and Cape May counties. The bakery also runs retail stores in Atlantic City and Northfield.
Some companies stockpile resources for lean times when prices are favorable. But Giampaolo said that isn’t possible for a bakery that produces pastry shells, flatbreads and garlic loaves by the thousand.
“For the majority of our products, you can’t stockpile ingredients,” she said. “You can’t buy three months of flour because we move through so much. It’s just not feasible. I’d have to start Formica Farmville in the heart of Atlantic City.”
Giampaolo said the company tries to absorb as much of these commodity fluctuations as it can. But ultimately its sales ledgers have to keep pace.
“We work very closely with our vendors. Only in those instances where we have that need to pass on a commodity price do we do it. It’s always difficult but it’s part of the economy,” she said.
Tracking this inflation is the whole reason economists obsess over the monthly price of chocolate chip cookies (up 7 cents per pound in April over March, according to federal figures).
What made the latest food-price increases so predictable was the rise in the price of gasoline, Anderson said.
“Higher gas prices directly influence food prices. Everything you buy at the local grocery store … takes energy to manufacture, create and ship to the store,” he said.
Not everything has gone up. Some dairy products such as milk, ice cream and butter are actually down from last year. Field tomatoes, bananas, broccoli and iceberg lettuce cost less as well.
Good news is that with summer gas prices nowhere near the $5 per gallon estimates of last winter, food prices should remain stable through the fall, according to the federation’s forecast.
“We’re seeing some moderation in fuel prices, which will help to relieve some pressure on food prices,” he said.
This has a trickle-down effect for area restaurants as well.
Ruth’s Chris Steak House in Atlantic City evaluates its menu prices about twice a year, general manager Judy Reahm-Coffee said. While customers are accustomed to paying market prices for fresh seafood or lobster, fluctuating ingredient prices often are reflected in the prices of other entrees as well, she said.
“We’ve noticed prices are up. It all relates to gas prices — for shipping, for feed, for everything,” she said. “You want your menu prices to stay in line with the prices of food. So we examine our menu about once every six months.”
The good economic news is the Atlantic City steakhouse is busier this year than last year, suggesting diners have more disposable income to enjoy a dinner out, she said.
“That’s a good sign for the economy,” she said.
Marcacci Meat Market in Ventnor saves money by running its own slaughterhouse in Vineland. Owner Musa Can, of Ventnor, said his company is paying about 3 percent more for livestock than last year. But that is a bargain compared to the 7 percent that his competitors pay wholesalers.
He noticed this year that eggs and poultry have increased significantly in price since last year. Grade-A eggs cost 21 percent more than they did last April while fresh, whole chickens cost 22 percent more per pound.
“When commodities go up, everything else does, too. These animals have to be fed,” Can said. “The commodities have to be shipped. The more expensive fuel is the more expensive meat is.”
The local effects of rising gas prices make him a keen observer of geo-politics, particularly in the Middle East.
“If we hypothetically attack Iran and they close the Strait of Hormuz, our entire economic system could collapse. Speculators would know prices would go up,” he said.
Can said customers definitely notice higher prices in their grocery bills.
“If they spend $190 for their Memorial Day barbecue, they probably will notice they spent $160 last year,” he said. “It pays people to shop around.”
Many food prices higher
The average price of certain foods is higher now than last year:
Food 2011 Price Price Now Change
All-purpose flour $.49 lb. $.53 lb. 9 percent
Lean ground beef $3.43 lb. $3.86 lb. 13 percent
Sirloin steak $5.69 lb. $6.09 lb. 7 percent
Whole chicken $1.24 lb. $1.52 lb. 22 percent
Grade A large eggs $1.30 $1.58 21 percent
Source: Consumer Price Index, U.S. Bureau of Labor Statistics, Mid-Atlantic Region
Dining out, staying in
Consumers in southern New Jersey are paying higher prices at restaurants and supermarkets alike compared to a year ago:
Change since April 2011
All food 3.2 percent
Food at home 3.8 percent
Food away from home 2.4 percent
All consumer prices 2 percent
Source: Consumer Price Index, Philadelphia-Wilmington-Atlantic City Area
Contact Michael Miller:
609-272-7217
