By Quentin Fottrell
Inflation is steadily rising. That much we know. But experts say the steepest hikes will be for the stuff you want, but don’t need. Staples such as milk, bread and butter – the consumer-sensitive “open-you-wallet” items that send you shopping even on a rainy day are unlikely to budge as much. It’s the non-essentials like blue cheese and parma ham at the deli counter you need to watch out for.
The cost of living rose in September for the third consecutive month, according to Labor Department data, increasing 3.9% in September, the highest level in three years and above the Fed’s comfort zone of close to 2%, The Wall Street Journal reports. On Tuesday, producer prices – the amount farmers receive for their goods from manufacturers – rose by 6.9% compared to September 2010.
Your grocery basket will still get pricier, experts say. “Staples such as milk, eggs and butter will see only modest increases given they are traffic drivers for most retailers,” says Sherif Mityas, a partner in the retail practice at AT Kearney, “while more convenience or impulse items such as ice cream, deli meats will show much higher price movement.”
That also means snacks: corn chips and other guilty pleasures, says personal finance and investment blogger Andy Nyquist. “One area where they may look to pass price increases is snacks, especially in higher-end grocers and even supermarkets that market their healthier goods,” he says. “Corn prices have moved higher over the past year and those input costs are now hitting many snacks and cereals we know and love.”
Aside from rises in gum and candy, shopping bags will continue to get lighter, too. Nyquist calls it, “Honey, they shrunk my grocery bag.” Bags of chips and crackers and cereals are getting smaller, he says. “They are simply reducing their costs to keep prices attractive for consumers hit hard by economic hardship and uncertainty,” he says. “This will continue as food and energy costs are pushing the CPI higher.”
Others see more broad-based hikes even sooner than the six to nine months expected by some analysts. “We’re going to see dramatic increases even through the holiday time,” says Phil Lempert, CEO of grocery information site SupermarketGuru.com. But he says still watch out for deals on free Thanksgiving turkeys – as long as you spend a fist-full of dollars. “Where you do your Thanksgiving shopping is where you are most likely to shop for the holiday season,” he says.