OCEAN CITY, N.J.— For years, you could buy an ice cream cone for 99 cents at Jilly's Ice Cream Factory on Ocean City's Boardwalk.
It was a point of pride for co-owner Jody Levchuk, who held steady on the price while his competitors' prices rose to $2.75 or more. And it helped Jilly's cultivate a following of summer visitors who loved a bargain.
But when milk fat prices recently soared, pride had to give way: A Jilly's cone is now $1.75.
"We caught a little grief from our regulars, because they were so used to the old price. We definitely lost part of our customer count, and it hurt our gross, too," said Levchuk.
Just when you really, really want an ice cream cone, the price is rising. But it's not summertime gouging by manufacturers.
The cost of milk fat, the principal ingredient in ice cream, jumped 71 percent over the past six months to $2.22 at the end of June. The industry blames a new government pricing system, while Agriculture Department officials point to a seasonal slowdown in milk production.
As a result, retail prices are up 4 percent from last year, manufacturers say, triggering a 3 percent drop in consumption.
"It's terrible," said Janet Friedman, 71, of Margate, N.J., passing up her favorite dessert — Breyer's chocolate ice cream — at a supermarket Wednesday.
Dreyer's Grand Ice Cream Inc., the nation's largest manufacturer, reported a $4.9 million loss in the year's first quarter, despite a 13 percent boost in sales.
"I know I've talked to a half dozen companies who've told me they don't want to but that they're going to have to raise the prices of their ice cream creations because of the increased cost of milk fat," said Donald Buckley, executive director of the National Ice Cream and Yogurt Retailers Association, which represents independent store operators.