Consumers, restaurateurs feel pinch of rising food prices

Sue Lednicky has been a wary observer of grocery prices' recent steep climb.

"It's getting ridiculous to buy food," she said. "It's painful. I was just complaining about the price of a gallon of milk at the grocery store," where she found 1 percent selling for $3.09.

It's doubtful Todd Clore would argue.

"In dairy products, the swings have been more dramatic over the past couple of years," said Clore, owner of Todd's Unique Dining in Henderson. "We used to be in single-digit percentages, where it would go up 5 (percent) to 8 percent. Now, it's swinging 15 (percent), 20 percent sometimes."

Their statements are borne out by the University of Wisconsin, which reported that the national average price of a gallon of whole milk rose from $3.30 in January to $3.65 in July.

But Libby Lovig, vice president of Nevada operations for the Dairy Council of Utah and Nevada, said dairy farmers aren't the beneficiaries.

"The price farmers are being paid for their milk is as low as it's ever been," Lovig said. "What people are seeing in the store is not trickling down to the dairy farmer."

So what gives? Well, at least in part, it seems we have something else to blame on China.

"Generally, what we're seeing is an increase in the consumption of food in China as a result of income rising there," said Steve Brown, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas.

The growth in the manufacturing sector in China has led to a general switch among Chinese people toward eating more meat, he continued.

"That makes grain more scarce, because grains are what is fed to the animals," Brown said. The wacky worldwide weather situation hasn't exactly helped; drought in Texas and Oklahoma, for example, also pushed grain prices higher, he noted.

Lovig has seen plenty of evidence of that upward pressure.

"The price of feed to the farmers has almost tripled," she said. "Corn has tripled, hay is two-and-a-half times what it used to be, cottonseed has gone up. Fuel has gone up, as we all know," which means it costs more to move the feed to the cows and to move the milk to market.

Increases aren't limited to milk and grain. Meat prices are up; apples are at a three-year-high. The list goes on and on. But, as with anything having to do with economics, the root of the problem isn't as clear-cut as bad weather and millions of people eating more meat.

"The other thing that's going on is we're seeing some general results of inflationary pressure created by the Federal Reserve system," Brown said. Monetary policies designed to keep the economy moving, he said, have led to overall increases in price levels.

"One of the places that's showing up is food -- across the board in food," he said. "Inflationary pressure has to show up someplace. Food is where it's showing up right now."

From a restaurant owner's perspective, Clore said, food has gone up "like we've seen in the retail sector -- probably 15 (percent) to 20 (percent) to 25 percent increases on most products."

He said he also hasn't seen relief in some areas where he used to find it. Because he serves a seasonal menu, Clore could take advantage of lower prices that came with, for example, buying and serving seafood in season.

"Halibut used to come down to $10, $12 during the peak of the season," he said. "Now, the lowest I've seen is $17."

George Harris, owner of Mundo Latin Chic Restaurant at the World Market Center, has seen extremely steep increases in some areas.

"Tomatillos were $21 a case," he said. "They went up to almost $60 a case -- all in a two-month period."

Harris said his restaurant charges $7.50 for a serving of guacamole. Right now, the cost of that guacamole -- without taking into account overhead such as labor, utilities, taxes -- is $4.85.

And the squeezing doesn't stop there.

"The hidden stuff is in the gasoline now," Clore said. "Now, every time a purveyor delivers, they tack on a gas surcharge. So even if the product is already high, once they deliver it, they get another $5 or $7."

"I think there's a strong case to be made that some of the suppliers are taking advantage," Harris said. "Gas went up but came down, and the fuel surcharges never came off." Harris said he understands that purveyors have their own problems, such as unpaid bills from restaurants that go out of business. But that doesn't help those who are struggling to survive.

"If gas goes up a nickel or 10 cents a gallon, people who eat out four times a week are cutting down to two times a week," Harris said. And tighter economic policies, he said, make it difficult for restaurant owners to get loans to help them float through the roughest times.

While it might seem like a simple solution would be to pass along the increases to customers, Clore said that's not the case. Even though consumers are paying more at the supermarket, "I don't think people put those two together. I think even though people know that they're spending more money on groceries, when they go to a restaurant and they notice that prices have gotten more expensive, I don't think they correlate the two."

"It's a tough row to hoe," Harris said. "The good news is the people of Las Vegas are very good at supporting local restaurants."

So until -- and this is a leap of faith -- inflationary pressures ease and food prices stop their rapid ascent, how can consumers stretch their grocery dollars? Lednicky, a nutrition educator with Nevada Cooperative Extension, has a bit of advice.

"I'm just at the point where I'm waiting for sales before I buy certain things," she said. "There's stuff that you have to have, but for some things, I just wait.

"Make yourself a menu and try to stick to it as closely as you can. Look at the food ads and take some time to look for coupons for things, because know you can go to a lot of sites online and get coupons. You really have to make use of all of those resources."

Because in one regard, it seems that home cooks and restaurant owners are on the same life raft.

"We're just doing what we can in this economy," Clore said, "and trying to keep our heads above water."

Contact reporter Heidi Knapp Rinella at hrinella@review journal.com or 702-383-0474.