The PracticalDad Price Index of 47 grocery store items was finished and the Total Index of 107.29 showed little change from March’s level of 107.24 (November 2010 = 100). When the ten non-food items are removed, the Food-only Index was likewise almost unchanged with April’s 113.46 up slightly from the previous month level of 113.35. This is the second month of a slight recovery after the three month drop that commenced from the Indices highs reached in December 2012.
While the monthly survey of the three unrelated stores was routine, one thing did jump out and I’ll watch going forward to ascertain whether there’s something happening or if it’s just me. There were two instances in which the typical products weren’t on the shelves; this doesn’t mean that the shelves were empty, but the shelf label that indicated that the item even existed on the shelf was completely missing. This is on top of similar observations at isolated instances in the recent past. With the knowledge that the median family income has dropped by 7.2% since December 2007 and the number of Americans on Food Stamps has now surpassed 50 million, there’s simply less available for spending. Understand that the number of different products available in groceries has risen significantly in the past several decades with a much greater variety now than was available when our grandparents went grocery shopping; but there are production costs with each product and a food manufacturer is going to begin to cull out those products which don’t maximize profit on each production run. Likewise with the grocer, who doesn’t want unsold inventory sitting around, tying up cash. I do know that one of the three grocery stores no longer sells bulk size boxes of diapers in the size that’s used for the Index, although it keeps the smaller sized/higher margin product on the shelves. This is the same store which stopped selling the Index formula (Enfamil Infant/23.4 oz) more than a year ago when it realized that the customer base simply wasn’t buying it in sufficient amounts to justify keeping it stocked. The long and short is that as incomes continue to drop and money is drained from the system, the variety to which we’ve become used will drop as well.
Month Total Index Food-Only Spread
1/13 108.01 113.24 5.23
2/13 107.81 113.59 5.78
3/13 107.24 113.35 6.11
4/13 107.29 113.46 6.17