The market basket, April 2008
As part of one of my recent shopping trips, I continued what has become a semi-annual look at what I call the “market basket” – comparison shopping between the four major grocery stores here in the Salisbury area to determine pricing trends. The four contenders are Wal-Mart, Giant (a division of Ahold, based in the Netherlands), Super Fresh (part of the A&P grocery empire) and Food Lion. With the exception of Wal-Mart, these are all large regional chains.
If you look at the results from my recent trip, you’ll see that Wal-Mart continues to hold a healthy lead over its competition but the margin is slowly abating. Of the twenty grocery items I use to compare the stores, Wal-Mart tied for the worst with 11 price increases. It doesn’t seem as if they can drive down their suppliers anymore but at least many of the increases were fairly small. They do add up, however.
I’ve also added one item for comparison’s sake and will continue to check it as time progresses to see what effect is shown on food prices, that being the price of a gallon of gasoline at the station I generally use. On Sunday it was $3.419 but it’s jumped again this week. It does seem that the biggest culprit of price spikes in my October 2007 report – dairy products – have turned around a little bit but the pinch is being felt on a number of other grocery items because transportation costs affect almost every conceivable product.
Of course, mine is an inexact science because I use a fairly small sampling of items and stores as a study group. Originally it was based on a lot of items I purchased and since I don’t eat certain items as a rule, whole sections of the store aren’t accounted. Also there are times a store runs a large sale that just happens to include a number of my sample items and the discounts skew my results. (This is why I note which items were on sale on the week I did my shopping.)
Another trend I have noticed but I don’t account for is shrinking packaging – for example yogurt cups that used to be 8 ounces are now 6 ounces while the price remains constant. The other key change this time is in the detergent aisle, where many brands have gone to a concentrated 50 ounce size that has pretty much replaced the old 100 ounce bottle - again, the price stays fairly stable but the amount of product is reduced. This probably adds a point or two to the inflation rate but I can’t easily reflect this in my study.
Because I do a lot of my shopping at Wal-Mart, the increase in grocery prices has actually hit me harder than most. Those who frequent the other stores are still losing out in comparison but have managed to enjoy a more stable bill because of the other chains’ aggressive pricing.
On the whole, it’s no shock to see prices up across the board but having dairy products deflate slightly makes some difference. If you’d like to check out my older studies, here are April 2007, October 2006, and April 2006. Then you can see which groups of items have jumped the most in a two-year period.
It all starts here
Since I started on the subject of incrementalism at the tail end of last night’s post, I’m going to follow with my thoughts on this news item from my associates at the AIA.
After months of consultation with AIA federal relations staff, Rep. Ed Perlmutter (D-CO) will soon introduce comprehensive legislation aimed at promoting energy efficiency in residential buildings. The bill would provide incentives to lenders and financial institutions to provide lower interest loans and other benefits to consumers who build, buy, or remodel their homes and businesses to improve their energy efficiency.
Rep. Perlmutter, who sits on the House Financial Services Committee, was asked by Committee Chairman Barney Frank (D-MA) to craft legislation aimed at promoting energy efficiency in the residential sector. The legislation will likely be introduced in the coming weeks, and Chairman Frank has indicated that the Committee will take swift action to advance the bill.
On April 22, AIA President Marshall E. Purnell, FAIA, spoke at a forum addressing the current state of energy consumption in buildings and how Rep. Perlmutter’s bill will provide greater tools for homeowners, lenders, and government-sponsored enterprises (such as Freddie Mac and Fannie Mae) to improve energy efficiency. “Last year we advocated strongly for energy-efficiency requirements for federal buildings,” noted Purnell at the forum. “This year we are working with the Financial Services Committee to craft legislation that will create federal incentives for energy-efficient residential projects. This is a necessary step to ensure that we continue making significant reductions in the amount of fossil-fuel generated energy our nation consumes through its homes and buildings.”
The legislation would provide incentives, grants, and educational opportunities to encourage the construction and renovation of energy-efficient homes and buildings and the development of sustainable communities. Specifically, the bill would require residential single-family or multifamily structures constructed using federal monies (such as housing built under Section 8, Hope VI, or the Federal Housing Administration) to meet more stringent energy-efficiency standards.
The bill would also encourage the use of energy-efficient and location-efficient mortgages (EEMs and LEMs). Under the legislation, Fannie Mae and Freddie Mac are required to promote and facilitate the use of EEMs and LEMs. The bill would mandate that Fannie and Freddie purchase a certain percentage (in comparison to total mortgages purchased) of EEMs and LEMs every year.
We started down this road with requiring “green” LEED-certified federal buildings a few years ago, after some states and municipalities made this a requirement for their buildings. And as the square footage threshold for LEED certification requirements continues to shrink and place more and more construction into that realm, this represents the first time the camel’s placed his nose under the residential tent – certainly it won’t be the last because government can never leave well enough alone.
Especially worrisome are the new mandates on Fannie Mae and Freddie Mac. It’s bad enough that the federal government is expanding their reach in the wake of the subprime mortgage crisis, but this foray into EEM’s and LEM’s is certain to become a boondoggle in and of itself – something tells me that the price of energy-efficient construction is getting ready to spike once the federal government starts throwing money that way. If you want an example of this ask yourself how much college costs go up each year and compare that to the rate of inflation. Colleges feel free to raise prices where they can because the financial aid is lucrative, regardless of the amount of education provided.
So Congress, with the full support of an organization that obviously doesn’t take my views into account, is going to move full steam ahead into wrecking two more markets. It’s just like they’ve done with ethanol requirements - managing to foul up the energy picture, the cost of food, and a few car engines as well in one fell swoop of regulations and laws. Instead of alternative fuels, can we get an alternative Congress?
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