High Food Prices Are Impacting Even Affluent Families

It's all good. Sort of. Let's be clear that no one' starving in the top 10 percent of high earning households in the US and Europe. Just look at the rising sales of plus sizes in clothing if you dont believe your own eyes.

But a funny thing happened on the way to Whole Foods: additional demand from developing economies combined with occasional shortages driven by a raft of economic, environmental and random factors is putting sufficient pressure on food prices that even those previously immune are having to make choices.

Which is an interesting statement in and of itself: for the past few years choice was a choice, not a requirement. It speaks to the uneven distribution of income, but also the ways in which a global economy reallocates and distributes its bounty. There are those who may argue that a little humility is good for the soul and that these economies will be stronger for it. But there are also those who wonder if this is just clearer evidence that long-term structural changes in relative wealth about which many have warned are becoming impossible to ignore. JL

Ellen Byron reports in the Wall Street Journal:

More high-income households, defined as those earning more than $100,000 a year, report feeling pressure. Last month, some 36% of these consumers said food prices are negatively impacting their overall spending habits, up from 20% in January,

Leanne Powers-Mattioli with her husband, Chris Mattioli, are hosting their annual end-of-summer beach barbecue next month at their shore-front home on Lake Erie for about 200 friends and family members. This year, they won't be serving shrimp cocktail.

Stubbornly high prices for shrimp prompted Ms. Powers-Mattioli to instruct the caterer to substitute locally sourced heirloom tomatoes, fresh mozzarella and basil drizzled with olive oil. And she is opting to serve barbecued chicken, along with potatoes and lots of salads, instead of the usual hamburgers.

"We've always done burgers in the past. They used to cost around $2 per person, but now it's up to $3.75," says Ms. Powers-Mattioli, a clothing-store and dog-spa owner who lives in Hamburg, N.Y. The couple spends a lot on drinks and music, and this year they want to keep the food budget under control, she says. "I thought hamburgers were just an everyday staple, but I'm not going to pay nearly double for them."

After a few years of steadily upward-creeping prices, experts say this fall many more families will start to feel the sting of higher food bills, as several economic events push the price of staples to new heights. In July, beef prices rose 10% over July 2013 levels, while fresh fruits were 6% higher and butter was 17% higher, according to the U.S. Bureau of Labor Statistics.

Rising prices have been battering the budgets of low-income consumers in recent years. Now, researchers say more high-income households, defined as those earning more than $100,000 a year, report feeling pressure, too. Last month, some 36% of these consumers said food prices are negatively impacting their overall spending habits, up from 20% in January, according to survey data by Consumer Edge Research.

Ms. Powers-Mattioli recently did a double-take when checking her weekly grocery-store receipts. Typically, she spends around $130 a week on groceries for her husband, young daughter and herself, but lately that figure has climbed to around $200. "I don't even buy chips, snacks or any pre-made salads anymore," she says. "What is going on?"

Experts say rising prices across such a wide range of foods makes shoppers feel as if their personal spending barriers have been breached. "People have, almost regardless of income, a price range in mind of what something should cost," says Thom Blischok, chief retail strategist for Strategy&, a unit of PricewaterhouseCoopers. "Right now, a lot of that internal navigation is being challenged."

Leanne Powers-Mattioli, center, has been serving chicken, rather than her customary menu of hamburgers and shrimp, at the summer cookouts she hosts for family and friends at her shore-front Lake Erie home. Her guests last week included Gwen McQuiller and Ashley Herrmann, right Mike Bradley for the Wall Street Journal

A number of factors are pushing prices into new territory. High grain prices and drought conditions in states including Texas, Oklahoma and California have shrunk cattle herds, leading to higher meat and dairy prices. Dry weather in the U.S. and Brazil has hit fruit, vegetable and coffee prices.

Meanwhile, a disease known as porcine epidemic diarrhea virus has killed millions of piglets and contributed to higher pork prices. Florida's orange and grapefruit trees are suffering from a disease known as citrus greening. And a bacterial infection has depleted supplies of shrimp in southeast Asia, the source of much of the shrimp eaten in the U.S.

While it is fairly easy to substitute cheaper alternatives for particular fruits and vegetables, the simultaneous hike in beef, pork and fish prices has made most shoppers keenly aware of the pinch.

"Protein prices are just so visible to people because they build their meals around it," says Stacie Rabinowitz, a senior analyst with research firm Consumer Edge Research. "All incomes feel it."

Some grocery stores are trying to explain market forces to shoppers, hoping it will help ease the pain of higher prices. "We get used to ups and downs in meat supply, but current costs for beef are higher than I've ever seen in my 41 years at Wegmans," Mary Ellen Burris, senior vice president of consumer affairs, wrote in her Aug. 11 blog post for the chain of 84 stores on the East Coast. Historically high corn costs dissuaded ranchers from expanding their herds, Ms. Burris wrote on her blog, while export demand remains strong from emerging markets including China.

Mary Kate Chapin and her father, Tom, also were among the guests. Mike Bradley for the Wall Street Journal

"This blog is for shoppers, but we have to make sure our employees understand everything, too," says Ms. Burris. "With ground beef this high, people want to know what's going on."

Rising shrimp prices even drove Ms. Burris to apologize. In a post last year, just before Thanksgiving, she detailed how the bacterial infection known as Early Mortality Syndrome has affected shrimp supplies. "We are very sorry about having to raise shrimp prices and are working closely with our suppliers day and night to be sure we have enough shrimp for your holiday needs," she wrote.

At Lunds and Byerly's, two Minnesota upscale grocery chains, roaming staffers known as "FoodE Experts" have suggested stuffing hamburgers with portobello mushrooms. "It's a way to still have a half-pound hamburger but you're only using one-third of a pound of meat," says Aaron Sorenson, a spokesman for Lund Food Holdings Inc.

And at meat counters, shoppers can pick up tips and recipes for flank steak, a less-expensive beef cut. "We'll share with you how to marinate and cut it for fajitas instead of using a tenderloin," Mr. Sorenson says. "And if you load it up with veggies, you can make that meat go even further."

Whole Foods Market stores regularly host events where shoppers meet local ranchers and farmers. Some recent conversations have turned to the difficult growing conditions that have contributed to higher prices, says Theo Weening, a global meat buyer at Whole Foods Market Inc. "Shoppers feel like they get the straight story talking directly to the growers," he says.

As an alternative to pricey sirloins, Whole Foods has promoted recipes for cheaper cuts like skirt steak and flatiron steak. Hamburger patties stuffed with portobello mushrooms, sun-dried tomatoes and blue cheese also have been popular, Mr. Weening says.

To cut shoppers' costs, online grocer Fresh Direct has made its "value packs" of meat smaller, reducing the thickness of cuts from 1.5 inches to 1 inch. The company also introduced new, cheaper cuts of beef, including Edge of Eye steak, which the company says is the "extremely tender" area between the chuck and ribs. To ease the sting of seafood sticker shock, Fresh Direct has introduced Arcadian redfish as a cheaper option, a spokeswoman says.