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CES In The News

Los Angeles Daily News
Sunday May 4, 2008
Soaring Food Prices Taking Their Toll on Families
By Susan Abram and Sue Doyle, Staff Writers

WINNETKA - Soaring prices at the supermarket are taking their toll on families across the Southland as the rising cost of everything from milk to eggs is stretching already-thin finances to the limit.

The Melgar family used to load up the cart at Costco with jugs of nuts and tire-size cheese wheels, but those days are over. Special cookies and treats for the three kids are left on the shelves. And restaurant dining has become too much of a luxury.

"We are trying to economize at home," said Norma Melgar, who plans to shut off her cell phone to help offset the rising food costs. "Little by little, we are cutting back."

The Winnetka family is among thousands across the Southland and the nation tightening their purse strings as a combination of factors - including increased consumption in developing nations, rising energy prices, crop shortages and booming corn-based ethanol production - have fueled the latest pinch to consumers' pocketbooks.

The situation has become so serious that last week Congress considered approving $770 million to help alleviate food price hikes that are threatening to spark widespread hunger and social unrest in some nations.

Already, a global shortage of rice has reached U.S. shores, and some chains, including Costco Wholesale Corp. and Sam's Club, are limiting customer purchases in California to four 20-pound bags of jasmine, basmati, or long-grain white rice.

And a recent report from the U.S. Department of Agriculture says the Consumer Price Index on food costs is likely to rise 4 percent to 5 percent this year - nearly twice the rate for 2005 - and it will come on the heels of a 5 percent increase last year that was the biggest in nearly two decades.

Nationally, a dozen large eggs cost an average $2.20 in March, up from $1.63 a year ago. For the year, a jump of almost 30 percent is expected from 2007 egg prices. White bread cost $1.35 a pound, up from $1.16 a year ago.

Major increases are likely for fats and oils, expected to rise 8 percent to 9 percent, and cereals and bakery products, projected to jump 7.5 percent to 8.5 percent.

But local prices can be even higher. At a Woodland Hills Ralphs Market last week, a half-gallon of milk cost $3.79, a box of instant oatmeal was $4.99, and a dozen store-brand eggs cost $2.99.

The rising food prices are complicating an already-delicate balancing act as many families grapple with soaring gas prices, foreclosures and an unsteady job market, said Larry Gross, executive director of the Coalition for Economic Survival
, a Los Angeles-based nonprofit.

"We're seeing people have their economic walls close in on them," Gross said. "They are finding there's little to cut back on to enable them to economically survive."


And growing numbers of families are trying to cope by shopping more frequently for cheaper milk, cereal, bread and other staples at drugstores or Target and Wal-Mart stores.

"You'll find a lot of households who would never have thought of shopping at 99 Cent Only Stores in the past who now have to," said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp. "It's a necessity to get by."

Purchases at 99 Cent Only Stores rose 2 percent in the past quarter, with more than half of all transactions involving food items such as produce and milk, CEO Eric Schiffer said.

The No. 1 store location in sales? Beverly Hills.

"Over the years, we've added more food and beverages, to the point that it makes up more than 50 percent of our sales," Schiffer said. "That surprises people who thought of our store as just selling trinkets."

But even those who buy food at 99 Cent Only Stores are pinching pennies as the retailer also has had to pass on some of its own rising costs, Schiffer said. "There may have been something we sold for three for 99 cents, and now we have two for 99 cents. We had sold 2.5 pounds of bananas for 99 cents, and now it's 2.2 pounds."

Living on a fixed income, Richard Haviland, 68, of Tarzana, snaps up Sunday fliers and scans them for bargains on anything from coffee to toothpaste. And he frequently finds prices at Longs Drugs and CVS competitive with traditional grocery stores.

"I haven't paid full price for toothpaste in three or four years. The prices between drugstores and grocery stores are night and day," Haviland said. "This is how I live. I have it figured out."

The Melgars also are finding savings by clipping coupons and shopping at grocery stores such as Food4Less and Value Plus. "You go to the market, and higher prices are everywhere," Norma Melgar said. "They are so bad."

Others are just beginning to change their shopping habits, including Thousand Oaks residents Lee and Tamie Casagrande, who are expecting their second child in the next few weeks.

"I like eating steaks, so I've noticed the increase," Lee Casagrande said as he pumped fuel into his Chrysler Town and Country last week. At $3.99 a gallon, the total came to $71.23.

But he said he is more concerned about keeping his job in a mortgage industry in the middle of a housing downturn.

As Connie Gatt of Topanga piled bags of groceries into her Jeep, she said she isn't at the point where she is willing to compromise on foods, although she and her husband and 8-year-old daughter don't often eat out.

"I'm in an OK situation, but I really watch the sales," she said, adding that the porterhouse steak and thin-sliced pork chops she bought were on sale.

"I won't compromise on food," she said. "But my husband and I talk about giving up the Jeep almost every day."

As other families and the elderly struggle, increasing numbers are turning to food pantries that are stretched thin, with less food on their shelves amid increased prices and tightened federal funding.

The Los Angeles Regional Foodbank saw its food volume decrease 64 percent in the past five years - or 11.5 million fewer meals.

"The demand is steadily increasing, and we're seeing more and more people who are visiting our pantries for the first time, finding themselves in the unfamiliar circumstance of asking for food," said Leslie Friedman, director of SOVA, an agency run by Jewish Family Service.

The agency operates three food-pantry and resource-center facilities, including one in Van Nuys, and it lists donations it needs on its Web site at www.jfsla.org.

Friedman said the rising cost of food means the pantry can no longer give out eggs. Day-old bread is also rare because the increasing cost of wheat has led bakeries to produce less and reduce surplus.

As $130 million in federal economic-stimulus checks arrive, analysts say many taxpayers will plunk down much of the money on food, gas and credit-card bills to help ease the economic pinch.

Some supermarkets already have jumped on the possibility, including Ralphs and Albertsons, which will add $30, $60 or $120 to a gift card when customers exchange tax refunds or economic-stimulus checks for the item. The bonus equals 10 percent of the amount exchanged. The offer began Friday and will last through July 31.

But enticing customers to spend more might be tough as families have started to forgo dining out to be able to afford the basic groceries. A recent survey by the National Restaurant Association found more than 60 percent of restaurant owners saw business drop in March.

"The soft economy continues to weigh on the minds of restaurant operators," said Hudson Riehle, senior vice president of research and information for the association. "Twenty-five percent of restaurant operators said the economy is the No.1 challenge facing their business, followed by food costs."

And even some discount mom-and-pop shops - where thrifty shoppers can buy anything from cookies to Chapstick for $1 - are struggling as consumers watch their pennies.

"They are struggling to survive," Riehle said. "They are competing with the Wal-Marts of the world. It's tough on them."


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