Food price inflation begins to moderate

Observation:  A recent newsletter from Phil Lempert cites a Food Institute report that food inflation has begun to moderate slightly, and that this trend should continue as we move through most of 2012.  Click here to read the story.

Implications:   This is the second story I’ve written today about the prospect of stabilizing or falling prices (the other was about Used Vehicles). 

The past couple of years had seen steadily rising prices at the gas pump, grocery store, and car lot; the consumer had learned to expect prices that seemed higher with every visit.  Because price increases have slowed or stopped in a couple of these key categories, is it possible that the consumer will feel like they’re paying less than they expected?  And could this create a “windfall” or “dividend” mentality that causes the consumer to splurge on an extra restaurant visit, a night-on-the-town, a little nicer vacation, or some other indulgence? 

Are you ready to invite them to enjoy your product or service as a smart place to spend some of those recently freed-up dollars?   

I’ve been warning of price inflation for a couple of years now, related to an inevitable rise in fossil fuel.  (Anything that is made with or shipped by using gasoline or diesel is going to become more expensive as the cost of that energy rises.)  But nobody is happier than me to see that—at least for now—my fears are unfounded.  That having been said, the logic of inflation has only been deferred; it has not been deleted.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.