Prices at the supermarket remain high

March 18, 2009 6:37:10 PM PDT
Remember when grocery prices started to spike when gas prices skyrocketed? Now that prices of commodities such as fuel, corn and wheat have all been going down, why not grocery prices?

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That is what Safeway's CEO wondered last week when he called the price hikes "disingenuous to consumers."

Most food manufacturers declined to respond, but Kelloggs said despite the recent drop in commodities, prices remain at historic highs.

Economist Ephraim Leibtag thinks food manufacturers are trying to protect themselves against future price jumps.

"They don't want to have to keep on pulling back and then raising prices again," said Leibtag. "Again, it does cause some bad PR, so they had to make some painful increases in 2008. They don't want to draw those back very quickly in terms of permanent price cuts because of the uncertainty in the market."

Still, economists predict that both grocery chains and food manufacturers will eventually lower their prices.

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