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Some suspect food price gouging
Retailers deny it, saying their costs are up
Charles Rex Arbogast / AP Some American consumers are forgoing the more expensive food items as prices at the market go up.
WASHINGTON — Forced to pay for once-free sandwich toppings and twice as much for some steak cuts, shoppers are wondering whether higher grocery bills and restaurant tabs truly reflect the trickle down of a global rise in food prices.
Veronica Banks, who lives outside St. Louis, said she suspects neighborhood corner stores are charging more for many items under the assumption customers won't pay the bus fare to go bargain hunting. Tom Seluzicki, a certified public accountant in Washington, said he assumes some food prices are artificially inflated to "compensate for lost margins on other products."
Without a doubt, basic economic principles account for most of the increase in the wholesale cost of food worldwide. Bad weather has hurt crops. Economic prosperity has driven up demand in developing countries. And soaring fuel prices have raised transportation costs. Mix in investors betting on continued food-price inflation and you have a recipe for a run-up.
Suspicions called unjustified
Foodstuffs from rice to steak cost more than a year ago — so much, in fact, that some consumers don't quite believe it all adds up.
But food retailers say consumers' suspicions of gouging are unjustified and that, if anything, they have refrained from passing along their extra costs.
"People have told me I nickel-and-dime them," said Kate Oncel, director of operations at The Brown Bag, a deli in Washington. "They don't understand the position we're in" of paying dramatically more for meat, produce, bread, packaging and deliveries.
Retailers raising prices and shoppers, in turn, raising eyebrows are reasonable and established responses, say economists and historians. While competitive pressures keep most businesses from taking advantage of their customers, some see an opportunity to push prices beyond justified levels.
"I like the beef rib-eye steaks," said Elbert Harris, a high school gym coach in St. Louis, who watched their price more than double to $12.99 a pound in the past 18 months.
Forgoing pricier items is an adjustment many Americans can afford and stomach, especially relative to the crises in the more than 30 countries where food protests have raged.
But in the U.S., customers notice when the grocery bill stays the same but the take-home haul lightens. Conversely, most remain quiet when prices stay the same or drop.
"I get upset thinking about how much we have to pay for things, but then I feel guilty when I see other nations that are dealing with horrible poverty," Helen Strouss, of La Mirada, Calif., said last week at an Albertson's grocery store.
Corn future near record
Although the wheat futures market did retreat on Friday after the U.S. government forecast a record global crop, corn futures remained near record levels on weather concerns.
Consumers forking over more to fill their gas tanks and stomachs may feel like they've been hit with an unprecedented one-two punch.
But the food-fuel wallop has landed before, said David Hackett Fischer, a professor of history at Brandeis University in Waltham, Mass. In the 13th century, demand for firewood and grain led to broader price hikes. And sellers have taken advantage of the system throughout the 20th century as free market ideas removed many price controls, he said.
Congress also is getting involved with the House Committee on Small Business scheduled to hold a hearing Thursday on food prices from the perspective of small retailers, farmers and manufacturers.
The hesitancy to raise prices unnecessarily is rooted in competition, said Ann Owen, an economics professor at Hamilton College in Clinton, N.Y., and a former economist at the Federal Reserve. But if the cost increases are more permanent, retailers can confidently raise prices because competitors are, she added.





Posted by THX1138 on May 14, 2008 at 12:30 p.m. (Suggest removal)
..However if everyone raises prices there's little if any competition. In fact it seem the local gas stations work together. One week one will be higher, the next week the other will be.
It seems many companies see hard economic times as an opportunity to inflate prices more than necessary. Sure wholesale prices have gone up but I doubt as much as we're seeing at the retail level!! If someone complains they just say blame oil.
IMO, necessities such as food should have an annual cap on how much retailers can jack-up the price. The sky's the limit for luxury items - basic food is not a luxury.
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