Sign in to follow this  
Followers 0
fishweewee

Food costs eating into consumers' saving at the pump as holidays near

Rate this topic

23 posts in this topic

This kind of story really burns my biscuits.

 

 

http://www.reuters.com/article/2014/11/10/us-gasoline-spending-analysis-idUSKCN0IU17Q20141110

 

Food costs eating into consumers' saving at the pump as holidays near

 

7:34am EST

 

By Nathan Layne

 

(Reuters) - Martha Franco says she hadn't really noticed the sharp drop in gasoline prices, even though the mother of three is always shuttling the kids around in her SUV. She has been paying closer attention to the soaring cost of meat instead.

 

"Meat and grains. Actually it seems like the price of everything is going up," Franco, 30, said following a visit to a Kmart discount store on the outskirts of Chicago, with her two youngest children and a bag of groceries in the shopping cart.

 

Retailers hoping for a lift to the year-end shopping season see promise in gas prices, which last week fell below $3.00 for the first time since 2010. Those savings, along with the effect of lower heating fuel, could amount to more than $2 billion extra per month for consumers, analysts calculate, enough to buy a lot of holiday gifts.

 

Franco's attitude is a reality check on those hopes, though: higher food costs are eating into or eclipsing savings from gasoline, and a $2 billion jump in spending could be a much smaller bump after food inflation is taken into account.

 

"People talk about gasoline prices but you can't look at them in isolation," said Craig Johnson, head of consultancy Customer Growth Partners (CGP). "We think the psychological effect of record food inflation, because it's a bigger part of the family budget, is a key behavioral driver here."

 

Food prices, which the U.S. Department of Agriculture predicts will rise 2.5 to 3.5 percent this year, is one of the main reasons CGP forecasts holiday spending to rise only 3.4 percent. Most other forecasts call for growth above 4 percent.

 

Johnson estimates higher food prices will likely swipe about $10 billion out of consumer wallets in November and December compared with a year earlier, double the $5 billion boost expected from cheaper gasoline.

 

Food accounts for three times more of household budgets than the amount spent at the pump, and he believes food inflation is currently higher than USDA forecasts, running at a clip of 5 percent.

 

The net impact of lower gas prices versus higher food costs will be felt most by lower income households, which on average own fewer automobiles, said IHS economist Chris Christopher.

 

Assuming the same amount of gas was bought both years, Christopher estimated consumers saved about $1.6 billion from lower gas prices in October versus the same month last year, while laying out $3.3 billion more on food.

 

"Remember everyone eats, but not everyone drives a car," Christopher said.

 

Fortunately for retailers, the fall in gas prices gathered steam and outstripped food inflation in the last month, leaving consumers with net savings of $760 million in October, compared with September, Christopher said.

 

The caution about food prices is not universal. Joseph LaVorgna, chief U.S. economist at Deutsche Bank, estimated a penny saved at the pump provides a $1 billion boost to consumers and that lower gas prices would have a broad, positive effect on the economy, even accounting for food prices.

 

With gas trading at about 27 cents per gallon lower than last year, that translates into annualized savings of $27 billion.

 

Still, retailers which offer gas, food as well as other items may be the best positioned, according to the companies themselves and analysts.

 

Same store sales results by apparel and teen apparel retailers, especially Gap Inc, were among the biggest disappointments in October, according to Thomson Reuters data, while Costco Wholesale Corp did better than expected.

 

Wal-Mart told investors last month that lower gas prices should help its business. On Thursday, citing fuel prices, Wells Fargo raised its earnings targets for convenience store chains Casey General Stores, The Pantry Inc and CST Brands, all three of which deal in groceries and sell gasoline.

 

"Consumers only have so much money in their budget and when a commodity like fuel goes down in price, it has historically created 'space' for us to compete for a higher spend inside the store," a CST official told Reuters.

 

Sears Holdings said that it too could benefit, noting shoppers at its Kmart chain were more sensitive to changes in gasoline and other prices.

 

The fall in gas prices "will hopefully give them added shopping confidence heading into the holiday season," said Imran Jooma, executive vice president of the holding firm.

 

But standing outside the Chicago area Kmart, shopper Franco did not display such confidence.

"Everything is so expensive and my husband's salary has not increased," she said

 

 

Share this post


Link to post
Share on other sites

Pretty soon we'll all be following fishweewee's lead and start baking our own briskets.    ;)


My wife tells about the high cost for the grocery store, and I believe her (but it really is unbelievable).   :bucktooth: 


Share this post


Link to post
Share on other sites

Pork is the new beef

 

I actually do much of the grocery shopping in my house. Not sure why.... but I kind of enjoy it.

 

Saturday I bought the pick a pack 5 meat items for 19.99 (good deal as most of the items are normally priced at 5-8 bucks per item) - no good beef available in that deal. (mostly pork, turkey, chicken and ground beef or stew beef) but.. I bought a boneless pork loin and put it in the crock pot with some Stubbs Honey Pecan barbecue sauce jazzed up with some ingredients of my own. Cooked it for about 3 hours and served with steamed asparagus, and cheesy grits made with cheddar, chick broth, butter, s+p garlic

No kids Saturday night. (son in college and Daughter was in Boston)

 

Meal for the wife and I was probably no more than 10 bucks + wine and beer.

 

To the point - yes prices are all rising and wages are not. There will come a day when people will start having goats and chickens in their yard in the suburbs behind the rows of corn.

The future is bright

Share this post


Link to post
Share on other sites
Pork is the new beef

 

I actually do much of the grocery shopping in my house. Not sure why.... but I kind of enjoy it.

 

Saturday I bought the pick a pack 5 meat items for 19.99 (good deal as most of the items are normally priced at 5-8 bucks per item) - no good beef available in that deal. (mostly pork, turkey, chicken and ground beef or stew beef) but.. I bought a boneless pork loin and put it in the crock pot with some Stubbs Honey Pecan barbecue sauce jazzed up with some ingredients of my own. Cooked it for about 3 hours and served with steamed asparagus, and cheesy grits made with cheddar, chick broth, butter, s+p garlic

No kids Saturday night. (son in college and Daughter was in Boston)

 

Meal for the wife and I was probably no more than 10 bucks + wine and beer.

 

To the point - yes prices are all rising and wages are not. There will come a day when people will start having goats and chickens in their yard in the suburbs behind the rows of corn.

The future is bright

 

I also do the shopping and don't mind in the least...unless it's on the 1st. Agreed on Pork Loin, much less and very tasty. :)

 

I make sure to do a big run the last couple days of the month!

Share this post


Link to post
Share on other sites

just had this conversation yesterday....pork loin sucks. it has zero taste....don't get me wrong, it can be worked with, but it takes real effort.

 

wrapped in bacon and smoked is the best way I have found..

Share this post


Link to post
Share on other sites
just had this conversation yesterday....pork loin sucks. it has zero taste....don't get me wrong, it can be worked with, but it takes real effort.

 

wrapped in bacon and smoked is the best way I have found..

 

 

I hope you were discussing this with a Mental Health Professional... :waiting:

 

That ****'s Delicious

Share this post


Link to post
Share on other sites

its and ongoing discussion between me and the wife....her and my MIL swear by just sticking garlic in it spicing it up and baking it...its not that its "bad" like that, just boring as hell.

 

Im not a fan of anything in the crock pot.

Share this post


Link to post
Share on other sites
just had this conversation yesterday....pork loin sucks. it has zero taste....don't get me wrong, it can be worked with, but it takes real effort.

 

wrapped in bacon and smoked is the best way I have found..

 

 

I hope you were discussing this with a Mental Health Professional... :waiting:

 

That ****'s Delicious

 

we have very different definitions of delicious then.

 

Im not a big fan of things that have no taste.

Share this post


Link to post
Share on other sites

You need to pick up a Rotisserie for the countertop.... Pork loin is pretty subtle if it's not jazzed up... but even unseasoned if you spin it just right and get a little sear on it... the flavor come's through

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to register here in order to participate.

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now
Sign in to follow this  
Followers 0

  • Recently Browsing   0 members

    No registered users viewing this page.