Just kidding, there’s not really any food inflation in America.JPMorgan’s Charles Grom reports:
Safeway is once again on the price investment cycle, taking prices down 3.4% from November to January 2011. Specifically, the grocer’s average price came in at $3.71 and total basket at $114.90, vs. $3.84 and $118.90, respectively, in our last study. As previously mentioned, Safeway and Wal-Mart were the only 2 retailers in our study to lower prices in 3 out of the 4 categories we track. To this point, the grocer delivered a slight 0.1% decrease in produce prices, a 3.3% reduction in meat, and a 0.2% drop in grocery prices. Similar, to the other retailers in our study dairy prices at Safeway increased (up 8.0% in January). All told, relative to January 2010, the grocer’s prices are still up 2.3%. Turning to observations, the store was running a wine special with 30% off a case of wine – which leads us to believe some high-end categories could still be under pressure.
And while we’re at it, what about Whole Foods, where customers presumably have more buying power and ability to withstand price hikes? It’s stil pretty modest.
In January 2011, Whole Foods allowed prices to drift slightly higher – up 1.2% relative to November. Specifically, the average price in our 31-item basket was up $0.05 to $4.06 and the total basket came in at $125.71, up from $124.19 in our previous study. As shown in the table below, specific categories driving the increase were price hikes in produce (up 8.6%), dairy (up 10%), and grocery (up 4.1%) while meat was down 3.9%. Overall, the price delta in comparison to the traditional grocers was 90 bps less favourable in January – with WFMI coming in 13.8% higher (vs. 12.9% higher in November). Last, Whole Foods prices are only up 1.0% since a year ago – which is in-line with Kroger’s price increase over the same time frame – evidence that the company is committed to keeping price in check