Americans are responding to a tough economy by spending less on food at the same time moderate inflation is predicted to continue for fresh produce through 2012.
The Commerce Department reported Sept. 27 that consumers spent 3.8% less on food in 2010 compared to 2009. That decrease follows a 1.1% decrease in expenditures in 2009 compared with 2008, the report said. Total spending by consumers in 2010 fell 2%, following a decrease of 2.8% in 2009.
Foodservice operations felt the biggest effect from reduced consumer spending. The Commerce Department report said average annual consumer expenditures dropped 4.4% for food away home in 2010 compared with 2009. That decline followed on the heels of a 2.9% drop in food away from home spending in 2009 compared with 2008. Total average expenditures for food away from home totaled $2,505 in 2010, off from $2,619 in 2009 and $2,698 in 2008.
Food purchased for at home use was down 3.4% in 2010, reversing a 0.2% gain in 2009 compared with 2008. Overall average annual expenditures for at home food in 2010 was $3,624, down from $3,753 in 2009 an $3,744 in 2008.
Before adjusting for inflation, the Commerce Department said the average U.S. household purchased $210 of fresh vegetables in 2010, up just $1 from 2009. The average purchases of fruit totaled $232, up from $220 in 2009.
Meanwhile, the U.S. Department of Agriculture’s Economic Research Service forecast in late September that consumer prices for all food would increase 3% to 4% this year and 2.5% to 3.5% next year. Consumer prices for fresh produce would increase at a faster pace, the USDA said.
The USDA report said consumer prices for fresh fruits and vegetables would increase from 3.5% to 4.5% this year and 3% to 4% in 2012. That compares to a minor 0.6% rise in 2010 and a 6.1% drop in 2009.
Desmond O’Rourke, president of Belrose Inc., Pullman, Wash., said he doesn’t expect to see too much growth in either volume or value in fresh produce sold in 2011.
O’Rourke said fruit and vegetable prices have been volatile in the last few years so predicting future inflation is difficult.
As many as 70% of consumers are looking for sale or discounted prices for food, he said.
O’Rourke said bananas are a key item for retailers trying to convey their value message to consumers.
“Retailers have to have their banana prices low to keep up the image that they are a low price or competitive store,” O’Rourke said. “Every (consumer) knows the price of bananas.”