Food Deflation Bites U.S. Grocers

Sunny side up? Over easy? Or, maybe you prefer your eggs poached.

No matter your choice, the American breakfast has been getting cheaper. The price of eggs just hit a 10-year low, and other cheaper foods are expected to nip U.S. grocery store margins throughout 2016.

For example, grilling hamburgers has also been getting less expensive. The USDA's price of retail ground beef was $3.73 per pound in June. That's down from $4.22 a year earlier.

Shoppers have also been paying less for milk, pork and chicken.

An Aug. 4 CNBC article has more about price deflation at your grocer:

From breakfast to dinner, your favorite meals at home may be coming down in price, but that's bad news for food retailers as deflationary conditions pinch sales and create added competitive threats. ...

"Near-term headwinds are likely to persist for U.S. grocers, as renewed uncertainty around household finances, heightened promo, competition and food deflation continue to weigh on the industry," said an analyst at Wells Fargo Securities. ...

[A U.S. Department of Agriculture] forecast shows the most deflation in meats, poultry, eggs and dairy products. That worries some grocers as lower prices for protein can hit them hard. ... Falling prices can spark competitive price cuts. ...

"We believe the magnitude of the grocery deflation pressures ... are too hard to ignore and make share price outperformance difficult, given the pressure on same-store sales and associated deleveraging impact on the income statement," said an S&P Equity analyst.

You can read the entire article by following the link below: