Food cost expected to rise

Eateries, stores, public watch expenses closely

Since 2007, Rhinehart's Oyster Bar had held firm on its prices.

Last week, however, the seafood restaurants in Augusta and Evans were forced to bump up some of their prices, owner Amy Bailey said. The changes weren't drastic -- as low as a few cents to as much as 50 cents -- but were necessary not to lose money on certain items, she said.

"It was probably a 1 percent increase because we had to do it," Bailey said. "It was really miniscule, but we needed that little edge. I don't anticipate us doing it again for a long time."

As food costs continue to rise, restaurants, grocers and food companies are signaling they will start to pass along price increases to consumers, something that many have been reluctant to do as the economy continues to be stagnant.

The Consumer Price Index recorded a 1.4 percent increase in food prices from September 2009 to September 2010, the most recent data available. That's greater than the overall rise in inflation, which stands at 0.8 percent over the year -- minus food and energy items.

Companies such as Kraft Foods, McDonald's, Sara Lee and General Mills have said they will raise prices, and grocers such as Kroger have said they will pass along those higher costs for brand-name items to consumers.

Among the food index, the measurement for meats, poultry, fish and eggs rose 4.7 percent over the 12 months before September. Dairy and related products climbed by nearly 3 percent, while fruits and vegetables saw a slight increase.

The cereals and bakery products and non-alcoholic beverages categories recorded slight price decreases in the index.

Bailey said she was reluctant to raise prices because of the sluggish economy. The largest increase she instituted was 50 cents for oyster dishes. Before waste, her oyster costs have increased since last year from 43 cents each to 57 cents each, she said.

Restaurants also need to look at eliminating menu items that lose money and improving the quality of food, Bailey said.

"You can't just be cheap. People need to know that the food is good," she said.

Havird Usry, the general manager at Fatman's Café in Augusta, said he recently had talks with his food distributor about rising food costs, but the restaurant hasn't raised prices yet.

"There is definitely some worry out there, and the adjustments are tough," Usry said. "If something goes up and it seems semipermanent, that's when we have to start making pricing changes on the menu. You can't go around and change a menu all the time. It's something that you have to work on."

At the grocery store, more consumers are willing to cut back and switch to private labels, according to a study this year by consulting and research firms Deloitte and The Harrison Group.

The survey found that 92 percent of respondents had made changes to their buying since the recession began. Eighty-four percent said they had become more precise in what they buy.

As she shopped Friday at Augusta's Washington Road Kroger, Kim Rich sorted through coupons. She said prices are important to her and she would notice a change of as little as 5 cents on an item she regularly buys.

Garrett Fulcher, the owner of T's Restaurant in Augusta, said he said he has to shop around more to help keep prices level.

"Everybody is budgeting as much as they can," he said.

Consumer food prices changing

Increases from September 2009 to September 2010, according to the U.S. Bureau of Labor Statistics Consumer Price Index:

Eggs - 11.3%

Pork - 10%

Milk - 6.5%

Coffee - 1.5%

Poultry - 1.4%

Fresh fruits and vegetables - 1%

Bakery products - 0.4%

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