What determines food prices?

4 hours ago  •  By JESSICA HOLDMAN | Bismarck Tribune
(5) Comments

When it comes to groceries in North Dakota, price trends are difficult to track.

Tom Woodmansee, president of the North Dakota Grocers Association, said the cost of groceries has gone up due to inflation, but no agencies monitor prices at the state or county level. The Consumer Price Index released by the U.S. Bureau of Labor Statistics tracks prices across the Midwest.

According to the CPI, prices for food at home in the Midwest have risen about 3.3 percent since May 2011. Since May 2008, prices have risen 10.2 percent. The Midwest region includes Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin.

Chris Allred, store manager for Albertsons in Williston, said grocery prices will fluctuate with commodity prices and increased transportation costs.

“It depends how far trucks have to go to get there,” said Mike Siemienas, spokesman for wholesaler Supervalu Inc. “You can only pack a truck so much.”

Supervalu provides many stores in the state with canned goods, cheese, sour cream, frozen items and fresh meat.

“As far as the final price for the customer, that is determined by the individual store,” Siemienas said.

Woodmansee said, based on ads, prices are higher in oil field towns like Williston and Dickinson.

Courtney Reddish of Bismarck said she has seen prices for milk go up and good bread is pretty expensive. She said the rest of her family lives in Williston and prices are “ridiculous.”

Arbatus Fasthorse of Bismarck said she has seen grocery prices rising at every supermarket in town over the last 10 months. She said the price for premium ground beef has gone up $1 to $2.

“I get tired of eating chicken all the time,” she said.

Fasthorse’s daughter, Lynn Fasthorse, recently moved to Bismarck from California and said prices are higher here.

“Rural areas and poor neighborhoods traditionally do pay more,” said Debra Pankow, North Dakota State University Extension family economics specialist. “They have less access to big volume discounters.”

Minot’s Marketplace Foods store manager Brian Vangsness said freight charges are a big reason for that, but Marketplace has been able to keep those costs down because its wholesaler is in town.

Williston Walmart store manager Ryan Keller said the store has been able to maintain its same shipping costs and prices have remained relatively steady.

“The cost of energy impacts all areas — not only transportation and heating costs, but food and other purchases — as transportation costs are passed on to the consumer,” Pankow said.

“It’s so competitive out here to get a truck driver,” said Watford City Supervalu store manager David Tschetter. “You have to pay the truck drivers more, too.”

Woodmansee said the number of shipments to stores has increased as well. Stores only have a set amount of storage space and with more people moving into the state, stores have to pay for extra deliveries to keep the shelves stocked.

Bill Liebel, owner of Liebel Jack & Jill in Watford City, said he used to get two trucks a week. Now, he gets three and snack food vendors are coming more often.

“The trucks aren’t big enough to haul enough to make it last,” Liebel said. He also does not have enough room to build extra storage.

Liebel said driving 45 minutes to Williston is not an option for many people.

“You don’t go to Williston to shop,” he said. “The road is packed.”

Other variables affecting prices include manufacturing costs, crop harvests, market competition and commodity costs, Siemienas said.

Prices may vary from one week to the next when stores run specials. Some shoppers, like Elaine Tuchscher of Bismarck, said they have not watched prices closely for changes. She watches ads for sale prices to save money, but if she really needs something she will buy it regardless.

Woodmansee said employee wages have an effect as well. Wages, even for grocery store employees, are 25 percent higher in oil field towns. When grocers have to pay more to keep workers, they pass the cost on to customers.

Vangsness said prices have gone up in Minot over the last two to three years, but not to the same extent as prices for other services like hotel rates. Prices for some goods have gone up more than others.

“When grain prices went up, so did cake mixes and cereal prices,” he said.

Pam Thompson, store manager at Central Market in Bismarck, also said there has been a slight increase in products containing flour and sugar, but she has not seen an overall increase.

“We haven’t seen any change as of now,” she said. “It’s hard to say in a year or two.”

Siemienas said corn has a big effect on food prices as well, because it is also used to feed animals and is in higher demand.

Liebel said his prices only go up when the cost of goods or transportation goes up. Those costs get passed on to customers. He said many customers complain about milk and soft drink prices but those are controlled by the state dairy board and distributor trade areas.

Pankow said consumers deal with price increases in a variety of ways, from cutting back on recreation and eating out, to not going to the doctor or buying health insurance. They may not save as much, or put as much money into retirement savings.

CPI data is available on the Bureau of Labor Statistics website at www.bls.gov/cpi.

Reach reporter Jessica Holdman at 250-8261or jessica.holdman@bismarcktribune.com.

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