Consumers Braced for Higher Food Prices

January 20/Chicago/States News Service -- According to its new food market research, The NPD Group reports that U.S. consumers are "bracing" to pay more for food in 2011, while food companies and restaurants strive to keep prices low.

NPD said that historically, consumers "have never let food costs rise faster than their incomes," managing spending according to their means.

"With food inflation accelerating in the last months of 2010 and government forecasts show it continuing into at least the first half of 2011, Americans will be making well-thought out choices this year on how they will feed themselves," said Harry Balzer, chief industry analyst at NPD and author of "Eating Patterns in America." "It amounts to 'relative food inflation.' They have so much to spend on food, and they will carefully pick-and-choose how they spend it."

As such, Balzer said consumers will use more coupons and seek discounts, leading to an increase of private label food spending and dining on leftovers.

According to NPD's in-home research, National Eating Trends, and its foodservice market research, CREST, 72% of meals are now prepared in homes, 18% are purchased from foodservice outlets, 8% are missed entirely, and 2% come from unknown sources.

Over the past two years, U.S. consumers have scaled back on visiting restaurants, with the industry suffering a loss of 2.4 billion visits from the year ending November 2080 through November 2010, from 61.5 billion visits to 59.1 billion visits.

NPD said American have begun increasing their visits to restaurants, though lingering unemployment is preventing a large-scale return.

"Food prices so far are up less than 2% from the depressed year ago levels, when they were dropping by 2%. Supermarket prices are still below the levels of 2008," Balzer said. "This is really a story about the upheaval created by the 2008 food price increases. We have yet to see how it will play out this time."

From the January 24, 2011, Prepared Foods E-dition