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Grocery bills drop a nibble

Falling raw material costs coupled with a feeble economy have curbed soaring food inflation in recent months.

March 28, 2009|Mike Hughlett | Hughlett writes for the Chicago Tribune.

Although prices may still seem painfully high in the supermarket aisles, long-suffering consumers are beginning to see a break in their grocery bills -- a bit of good news amid economic gloom.

Falling raw material costs coupled with a feeble economy have curbed soaring food inflation in recent months. Food prices fell on a month-to-month basis in February for the first time since April 2006.

Last year, food and beverage prices rose 5.4% as calculated by the Bureau of Labor Statistics, the largest annual jump since 1990, because of a big run-up in commodity and energy costs.

But as the global economy tanked in late 2008, prices for oil, corn, wheat and soybeans fell. Those declines, after a predictable lag, are filtering down to grocery store shelves, said Ephraim Leibtag, a Department of Agriculture economist.

Last month, the consumer price index food-and-beverages component fell 0.1% from January, and Leibtag said he expected further month-to-month decreases.

"The decline we saw last month is what we have been expecting," he said.

Leibtag hasn't changed his food inflation forecast of 3% to 4% for 2009. Still, given the depth of the recession, he said it should be closer to 3%. Food makers have been reluctant to pass on price decreases, and commodity prices remain high by historical standards.

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