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October 15, 2012

Breakfast Costs a Little More

For more information on Newsline, contact: Kari Barbic, Media Specialist, American Farm Bureau Federation, karib@fb.org.

The American Farm Bureau Federation has released its third quarter Marketbasket Survey. AFBF’s deputy chief economist, John Anderson explains the findings in this report from AFBF’s Johnna Miller
Miller:Shoppers paid about 2 percent more for groceries during the third quarter, according to the American Farm Bureau Federation’s Quarterly Marketbasket Survey.
Anderson:Primarily the increase was driven by a handful of items: some breakfast-related items, eggs for instance, and apples. Other than that, a fairly stable market basket. And while the quarter-to-quarter number was up, if you look at where the marketbasket value is compared to a year ago, it’s actually down a little bit.
Miller:American Farm Bureau Economist John Anderson says that might come as a surprise to those who have heard about the severity of the drought throughout much of the country, but it’s too early for consumers to really feel the pinch.
Anderson:There are some fairly long lags involved between when we see an effect at the farm level in raw commodity prices and when we expect to see that show up in food prices. So even though there’s been a lot of talk about drought and certainly the drought has been the major event in commodity markets this summer, it’s really way too early to expect to see that show up in the retail price of finished food products.
Miller:And it might also surprise some to realize some food items actually dropped in price.
Anderson:Some of our meat items actually went down year-over-year, even though there’s been a lot of talk about meat shortages and meat prices going up. Actually we have had some sizable increases in meat production recently and that’s really keeping a lid on meat retail prices. Now as we look ahead to next year we may see the effect of some production cutbacks coming into the market, but for the next quarter or two we may actually see increases in production that hold prices steady or maybe even move them down.
Miller:Johnna Miller, Washington.
Miller:We have two extra actualities with AFBF Economist John Anderson. In the first extra actuality he talks about one reason prices have remained stable. The cut runs 19 seconds, in 3-2-1.
Anderson:One of the things we’ve really seen some stability in in the last year or so, certainly relative to where we were a couple of years ago, is in energy prices. Now certainly energy prices are higher than a lot of us would like them to be, but they’ve been fairly stable for the last few months and I think that’s been a feature in in maybe slowing down some of this volatility that we have seen in food prices.
Miller:In the second extra actuality Anderson says stories hyping food price concerns have been overblown. The cut runs 20 seconds, in 3-2-1.
Anderson:There’s been a lot of talk in the news with the drought with the “aporkalypse” or “hamaggedon” or whatever you want to call it that made the news a month or so ago. A lot of concern about food prices as we move forward into next year. I think what our survey shows is that it’s certainly premature to get excited about that. At this point we don’t see much indication at all really of food price inflation starting to escalate. 
Miller:Newsline is updated Mondays and Thursdays by 5pm Eastern time. Thank you for listening.

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