LANSING — When it comes to grocery shopping, consumers are getting a bargain, according to the final Consumer Price Index (CPI) for 2016. It shows that the overall Food and Beverage index remained relatively unchanged from the previous year.
The CPI tracks baskets of consumer goods over time using a base year. The price series measures everything from recreation to food on a monthly basis. The Core CPI, which is the all items index without food and energy, used as a measure of inflation was 2 percent above 2015.
According to the report, the best food bargain is livestock-related food products – meats, poultry, and dairy – which showed a dramatic 4.2 percent shift down from the previous year on average. According to Michigan Farm Bureau Livestock Specialist Ernie Birchmeier, the depressed markets farmers have been experiencing over the last two years is finally reaching consumers.
“This is not necessarily surprising since producer pay-prices have been fading below typical cost of production for pork, beef and dairy farmers,” explained Birchmeier. “The Retail Meat Price data indicates retail beef and pork prices were down 7 percent in December 2016, compared to 2015.”
Birchmeier attributes the drop to a buildup of product inventory. “When livestock farmers are experiencing significant operating losses, you can appreciate their frustration with the lag that appears to exist between the prices farmers receive and prices consumers are paying,” he said, adding that consumer meat prices declined dramatically in the last quarter of 2016.
While consumers are spending less on food products, almost all the other broad categories have risen. Housing, transportation, medical care, recreation, and energy increased from last year. According to Birchmeier, the largest increases were in energy (5.4 percent) and medical care (4.1 percent).
According to the report, consumers are still expected to face rising prices elsewhere in the household. Consumers are likely to pay more out of pocket for items outside of food and energy in 2017 and could face inflation at 2 percent or higher.
— Michigan Farm Bureau
For more news from Michigan, click here.