11/11/08 Food prices

We're getting relief at the gas pump. How about at the supermarket? USDA economist Ephraim Leibtag. LEIBTAG "Some items maybe a little bit cheaper. We actually saw actually how milk prices were a little bit cheaper than they were a year ago." So what's causing a price change? LEIBTAG "With all the commodity prices for things such as of course gas and oil but also corn and wheat and soybeans coming down off their all time highs I think we're going to now longer see those high rates of inflation." He sees prices at the market moderating. LEIBTAG "Whether the prices will actually come down and are negative well I think some categories will see that but across the board I think it's more a matter of moderating inflation as opposed to deflation. The run up in food prices both at the manufacturing and retail level that took place over the last year or two was primarily due to much more expensive ingredients and much more expensive costs. What's happened now in the last six weeks or so a lot of those commodity prices have come down quite a bit and so the question becomes how does this all shake out?" Leibtag says manufacturers and retailers will raise prices to make higher profits but they'll also lower their prices on lower input costs in order to compete and expand business. LEIBTAG "The question is who is still paying the old prices that were much higher this summer and who is getting into new contracts where the prices are much lower." Voice of Idaho Agriculture