Why That Grocery Bill Is Increasing, Again
| August 1, 2008 | Posted by Roshawn Watson under Uncategorized |
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By: Roshawn Watson
Many of the manufacturers of our favorite brands of food products have recently faced unprecedented cost hikes. Apparently, several costs in the manufacturing process have increased: from the packaging to the product ingredients. Consequently, profits have recently declined for these companies, and they are about to past it on to consumers.
According to the Sun Times, this will be at least the second price hike of the year for most of the manufacturers. General Mills will reportedly increase their prices by about 9 percent whereas Sara Lee will increase their prices by an estimated 20% for meat products. Kraft and Kellogg are also expecting to increase their prices again. Note that Kraft just instituted an 8 percent price increase this past spring.
The Bet
These manufacturers are betting that shopping habits and brand loyalty will keep you purchasing their products despite the price increase. For example, many experts say that the price hikes are not driving consumers to generic products.
The Cause
In addition to rising expenses, the weak dollar and high global demand for American crops are cited as key reasons for the price increase and are expected to keep prices high.
Interestingly, some experts believe that this is not a temporal cyclic bump in prices but rather a long-term increase in prices for these commodities.
Some Grocery Products Will Increase More than Others
Although “overall grocery prices are expected to rise 5 percent to 6 percent this year,…some categories are projected to post higher increases, such as eggs, fats and oils and cereals.”
The Food Institute predicts 2008 increases of at least 9 percent for eggs, facts, oils and cereals.
If you want to slash your grocery bill, check out this article for some money-saving tips.
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