Why aren’t food prices dropping?

by Kirk Mason (mason@wsbt.com)

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Now that gas prices are dropping, many consumers are wondering why the price of groceries has not dropped as well. (WSBT photo)

Story Created: Nov 12, 2008 at 2:04 PM EST

Story Updated: Nov 12, 2008 at 2:38 PM EST

When gas prices soared above $4 a gallon this summer, that also sent grocery store prices up.

David Fougerousse of Galien asked a Good Question: “Since the stock market is dropping and gas prices are dropping, why aren't food prices?”

WSBT's Kirk Mason looked into it.

Gas prices have dropped from well over $4 per gallon to under $2 at some local stations — a more than 50 percent drop. But viewers are telling us through e-mails they're not noticing much drop, if any, at grocery stores.

IU-South Bend economics professor Grant Black says prices tend to go up faster than they come down. Black explains that it can be expensive for grocery stores to change prices because of the logistics it takes to do it.

Also, stores may have been losing money on certain items earlier this year when they didn't pass the entire increased cost on to customers. Black explained they may now want to wait to see just how the oil market will stabilize.

Meijer says many items on its shelves are purchased well in advance. Daily delivered items like milk, eggs and produce would be more likely to come down in price because of gas prices.

Martin's Supermarkets declined to comment for this story. A spokesperson said it's a complicated issue that's largely out of the control of the stores and more in the hands of manufacturers.

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