Stock up: Grocery prices have fallen for eight straight months
Grocery prices in the USA have fallen for eight straight months, underscoring an ongoing food deflation that has supermarkets at war while shoppers reap the benefits.
The Bureau of Labor Statistics’ Consumer Price Index showed food-at-home prices fell by 1.6% in July from the same month last year, as CNBC reported.
The price of a dozen eggs has dropped by about a dollar on average, according to CBS, with a gallon of milk dropping by about 40 cents and a pound of ground beef dropping by roughly 50 cents.
The reason: America keeps producing and stockpiling food even while the demand for it overseas tapers off. This is especially true in places like China, the network noted, where the increasing strength of the U.S. dollar makes American goods more expensive.
As a result, the USA could see the longest streak of falling food prices in 50 years.
Now grocery stores have entered what analysts are describing as a “price war.” At least five grocery chains claimed the food deflation threatened their bottom lines last month, The Wall Street Journal reported, including such retailers as Dollar General and Walmart.
William Kirk, a food retail analyst for RBC Capital Markets, told the Journal that he predicts America is about halfway through its current cycle of food deflation.
“It takes a while to work the excess supply out of the system,” he said. “You have to eat the cows.”
Now, the U.S. government is trying to help us eat through the excess food supply – the eggs and cheese of it, anyway.
The Department of Agriculture announced last month it would buy about 11 million pounds of cheese, reducing a cheese surplus that’s at a 30-year high while distributing the dairy products to food banks and pantries.
The government made a similar purchase of about $12 million in eggs recently, doing so under a Great Depression era program.
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