Amanda Vogel was surprised recently when she saw that the price of two of her grocery-store staples had soared.
At her local King Soopers, a 2-pound block of natural cheese went from $6.99 to $7.99, and a gallon of milk jumped from $1.99 to $2.49.
“I was shocked,” said Vogel, whose family of five lives in Hudson. “I plan on using less cheese in my next few menus. And possibly limiting my kids to only two servings of milk per day.”
Metro-area residents are being hit by higher prices at grocery stores and restaurants as rising commodity prices lead to higher food costs. The bigger receipts are accompanied by climbing gasoline prices stemming from unrest in the Middle East.
“It reflects the rising demand for commodities around the world,” said economist Jeff Thredgold of Vectra Bank Colorado. “You’re seeing higher agriculture prices, gold prices, steel prices, copper prices and oil prices. The rise in oil prices boosts transportation costs, which compounds the problem a little bit.”
Economic indicators portend more increases for consumers.
The Labor Department on Wednesday said wholesale food prices rose in February over January by 3.9 percent, the highest monthly spike since 1974. Crop damage from cold weather was partly to blame, forcing wholesalers to pay more for produce, but dairy and meat prices also rose.
In the Denver area, food prices were up 1.1 percent in the second half of 2010 over the second half of 2009, according a report issued in mid-February by the U.S. Bureau of Labor Statistics. That jump comes on the heels of a 3 percent decline in the same period a year before.
Trying to hold the line
The Denver Consumer Price Index showed that costs for food consumed away from home rose 1.3 percent between 2009 and 2010, while prices for food at home rose 0.5 percent over the same period.
Some restaurant owners say they’ve been trying to hold the line on price increases because they realize that some customers are still trying to recover from job losses and wage cuts.
“You grit your teeth and deal with it as long as you can,” said Joe Vostrejs, chief operating officer of Larimer Associates, which operates several restaurants in metro Denver.
One of them is Ernie’s Bar & Pizza in north Denver.
“Pizza is getting hit hard with rising prices for ingredients,” Vostrejs said. “Pizza is mainly flour and dairy, and both of those have been soaring.”
He noted that wheat prices have risen 28 percent since August.
Earlier this month, the United Nations’ Food and Agriculture Organization reported that global food prices hit a record high in February.
An index of 55 food commodities worldwide shows that prices rose 2.2 percent in January, the eighth consecutive month of increases, the agency said. The increase was driven mostly by higher prices of cereals, meat and dairy products,
Food companies in recent weeks have announced they would make price adjustments. Among those companies was juice-maker Tropicana, which said it will raise prices on some of its products by 4 to 8 percent. The PepsiCo- owned company attributed the move to the higher costs it is facing due to cold weather’s impact on citrus crops in Florida.
The trend is expected to continue for a while.
The U.S. Department of Agriculture projects that all food at grocery stores and restaurants will rise 3 to 4 percent this year.
Buying more store brands and fewer name brands is the new strategy for Howard Haynes of Denver. He has found that “food in general is going up” and suspects that packaging volume isn’t what it used to be.
Kasey Washington figures he’ll stop driving to make ends meet. “Everything is going up,” Washington said last week as he helped load groceries into a relative’s car at a Denver Safeway.
Markdowns help a lot
Luxury items such as chocolate and sugar seem to be rising the most, said Victor Leon, who does a fair amount of baking. “I haven’t seen too much increase in day-to-day items.”
Shari Myers, shopping for a week’s worth of groceries at a King Soopers store in Englewood, said she tries to keep costs under control by feeding rice- and pasta-based dishes to her three kids and hunting for cheaper cuts of meat.
“If you know when to shop, you can find bakery and meat markdowns, and that helps a lot,” she said.
Supermarkets can’t control many cost variables and must pass increases on to shoppers, said Kelli McGannon, a spokeswoman for King Soopers.
Suppliers are working with retailers to offer additional promotions, McGannon said.
“We recognize that the grocery budget represents a significant portion of consumers’ extra dollars,” she said. She suggested stretching those dollars by planning menus around on-sale items in weekly ads.
Restaurants already are “pretty lean and mean” after handling the recession for the past 2 1/2 years, said Peter Meersman, chief executive of the Colorado Restaurant Association.
Rising gas prices cut into consumers’ disposable income, impacting how food dollars are spent, Meersman said. Fuel costs also impact the price of shipments to restaurants.
Those two things “tend to negatively affect total restaurant sales,” Meersman said, so restaurant operators may offer lower-cost items or adjust portion sizes to avoid price increases.
Also, customers may change eating habits by selecting smaller portions or less-expensive items, he said.
Meersman doubts rising prices will keep people from dining out, pointing to a survey that shows 43 percent of adults say restaurants are an “essential” part of their lifestyle.
Staff writers Margaret Jackson and Steve Raabe contributed to this report.
Ann Schrader: 303-954-1967 or aschrader@denverpost.com
