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    Consumers Expect Food and Gas Prices to Rise in 2011

    Food retailers remain reluctant to raise prices due to shaky economy, according to NPD Group research.

    Chicago -- U.S. consumers are bracing to pay more for their food in 2011, according to food market research by The NPD Group, which has tracked all aspects of consumer eating behaviors in- and away-from-home for three decades. Historically, consumers have never let food costs rise faster than their incomes and have managed their food spending accordingly, whether choosing to eat at home or away from home.

    "With food inflation accelerating in the last months of 2010 and government forecasts show it continuing into at least the first half of 2011, Americans will be making well-thought out choices this year on how they will feed themselves," said Harry Balzer, chief industry analyst at NPD and author of Eating Patterns in America. "It amounts to ‘relative food inflation.’ They have so much to spend on food and they will carefully pick-and-choose how they spend it. Looking for more coupons and discounts, buying more private label foods, eating more leftovers, and generally getting the most bang for their buck."

    According to NPD’s in-home research, National Eating Trends®, and foodservice market research, CREST®, 72 percent of meals are prepared in homes, 18 percent are obtained from foodservice outlets, 8 percent are skipped and 2 percent are from unknown sources. Over the past two years U.S. consumers pulled back on their use of restaurants, and the industry lost 2.4 billion visits from year ending November 2008 through November 2010, from 61.5 billion visits to 59.1 billion visits. Food deflation during this period gave supermarkets the edge in terms of consumer food spending, according to NPD. As the economy has begun to improve, Americans have started adding more restaurant visits back into their routines, but high unemployment continues to hamper the industry’s growth.

    "Food prices so far are up less than two percent from the depressed year ago levels, when they were dropping by 2 percent. Supermarket prices are still below the levels of 2008," said Balzer. "This is really a story about the upheaval created by the 2008 food price increases. We have yet to see how it will play out this time."

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