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Utah: Prices are down, but what’s to come?

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Another month's worth of price breaks arrived for Utah consumers — this time, even at the grocery store.

The Deseret News' bag of 15 common household goods, from groceries to blue jeans, has dropped 4.2 percent in the past month. Since April, the goods have dropped 8.2 percent.

Last month, the basket's cost also declined, by 11 percent for the month and 4 percent since April.

Much of the drop came at the pump. Gas was down 30 percent for the month and 49 percent since April.

Overall grocery costs are down 7 percent in the past month — the first we've seen since April. Milk dropped 31 percent, and frozen corn fell 33 percent. Oreos were down 16 percent.

Food prices have been inching up since April in both our grocery bag and the Wells Fargo Consumer Price Index for the Wasatch Front. The Wells Fargo index in November found that the cost of groceries was up 8 percent since February.

So is this month's drop in grocery prices a signal of a trend to come?

The price decreases for milk and frozen corn stem from pure supply-and-demand issues, Harmons marketing director Keith Anderson said.

Gas prices, and therefore trucking costs, and the costs of raw ingredients such as wheat and corn are going down. Still, trucking is just part of the ultimate price that consumers pay at the store, said Dave Davis, vice president and general counsel for the Utah Food Industry Association. While corn prices are less than half what they were in June, they're still above historic norms, the New York Times reported.

Groceries leave a manufacturer and go through a warehouse and distributor before arriving at a store, noted Bret Gallacher, an Associated Food Stores spokesman.

"As we as a supplier start seeing our wholesale prices go down from our manufacturers, then we can come back and address that question" of whether prices will drop further, Gallacher said. "It hasn't happened yet."

Retailers have been slow to raise prices. The price of gas skyrocketed in the summer months before dropping this fall, but grocery prices have not directly mirrored that, mainly in order to remain competitive, Davis said.

A Kraft Foods spokesman told the New York Times that the company's food-ingredient costs rose 13 percent this year. The company, however, raised its overall prices 7 percent.

"Our retailers, they work off razor-thin margins," Gallacher said. "If there are opportunities to pass on cheaper prices, they certainly will."

It might be awhile. The U.S. Department of Agriculture forecasts that food prices will rise up to 4.5 percent next year. This year's increase is estimated to be up to 6 percent nationally.

E-mail: jtcook@desnews.com