Food prices rise despite drop in oil, corn costs - KWWL - Eastern Iowa Breaking News, Weather, Closings

Food prices rise despite drop in oil, corn costs


WATERLOO (KWWL) -- No doubt if you've been grocery shopping lately you've seen a bigger bill at the check out. Some input costs, like fuel and corn, have gone down. Food prices have not. One Iowa senator is looking into this and so are we.

"They used the increase price of corn as a reason for raising the price of food," said Sen. Charles Grassley (R-Iowa). "Corn is down 50% . Why aren't food prices coming down?"

In a letter to Grassley, the Grocery Manufacturers Association said that food manufacturers continue to produce products with corn purchased during a prolonged period of high commodity corn prices.

According to, the price of December 2008 corn has dropped more than 50% since the beginning of July.

Another input price that influences the cost of food is gasoline to fuel those food transport trucks. Since early July, overall fuel prices have dropped some 22%.

But food prices have increased nearly 2% during that same time period according to the Bureau of Labor Statistics.

So why the lag from the field or gas pump to the price at the check out?

According to Fareway Stores, if a company purchased corn last June for November 1st delivery, the cost is going to be much higher to produce the product today even though today's corn market has dropped substantially.

Hy-vee also issued a response to our questions about the higher grocery prices. Hy-vee says "food costs are tied not only to commodities, but also to such factors as global demand for products, U.S. exports, the strength of the dollar, transportation and packaging costs and weather-related production problems.

We are hopeful the recent decline in commodity prices are not short-term and will work their way through the system as quickly as possible."

The company went on to say, "in the meantime, Hy-vee is committed to helping our customers stretch their dollars by providing weekly menus that are tied to our corporate ad, our "30 meals for $3" program and in-store dietitians to help customers shop smart and stay healthy."

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