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Nielsen: Supermarket Prices Still Creeping Up

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Retail grocery prices in the U.S. continue to creep higher overall compared with 2008, according to new research from The Nielsen Company. The good news is price increases appear to be slowing compared with the price spikes experienced by shoppers in the spring of 2008 and 2007.

These were some of the findings from the "Supermarket Pricing Trends" study which looked at pricing of the top-selling items across 45 categories over the course of five years. It concluded by measuring the 12 weeks ending May 16 in total U.S. supermarkets.

Overall, grocery prices continue to inch up 0.44 percent compared to a year ago. The sum of average unit prices across the 45 category-leading items, which included everything from bacon to bleach to buttered crackers and hot dog buns, was $143.65.

Private label items, however, are on the decline. On average, prices for store brands fell 4.7 percent versus last year led by a 23 percent decrease in whole milk and a 27 percent decrease in the cost of a dozen eggs.  Some national brands in the dairy aisle are also seeing price declines. Some of these reductions are the result of pricing corrections for items with large price spikes in 2008.

Could this be a sign of more key items with lower prices on the horizon? This hasn't happened yet, said Tom Pirovano, Director of Industry Insights, The Nielsen Company. "From all of the talk we're hearing about deflation, it hasn't happened yet. It's a little premature because prices for many leading products are continuing to creep up."

He noted, the average unit price across the 30 category leading branded items grew 3.3 percent to $124.04 compared to the prior year.

One exception has been perishable items like dairy, produce and meats. Eight ounces of national brand cream cheese shrank 10 percent, 64 ounces of a leading orange juice brand can be had for 7 percent cheaper and a national brand of sliced cheese fell 5 percent.

The biggest price decrease was a dozen private label large eggs. Its cost plummeted 27 percent. A gallon of private label whole milk fell 23 percent and private label butter sticks is now 7 percent smaller.  These price reductions are likely a result of lower grain prices where it's less expensive to feed cows and chickens.
 
The study also highlighted the seasonal nature of pricing.  Prices reach their lowest points each year in late spring and early summer. Conversely, prices tend to spike in January.