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Don’t Let These Rising Food Prices Bust Your Budget

If your grocery bills seem a little higher lately, it’s not your imagination. Prices for raw foods have been rising, and those increases are starting to show up at the grocery store. But there are still ways to cut your bill.

Food prices rose 0.4 percent in April, according to the Labor Department, and are up 3.2 percent over the past 12 months. “There’s more to come,” says Phil Gorham, a senior equity analyst for Morningstar. A combination of rising demand in developing countries and poor harvests has steadily elevated prices for commodities including coffee, wheat, corn and chocolate. High oil prices have added to the cost of packaging and transportation. Manufacturers held off pushing through price increases as long as they can, he says, but the first big wave hit consumers this spring — and another planned round of price jumps could come as early as July.

Translation to your tab: 76 percent of shoppers say they have seen their weekly grocery bill jump by up to $50, according to a recent survey by coupon site RedPlum. Here’s how to combat rising prices on four items and categories — and don’t worry, the strategies work on other items you buy, too.

What items have you noticed big price jumps on? What are you doing to combat rising prices?

1) Chocolate

Cocoa prices are at their highest in 30 years due to conflict in Ivory Coast, the world’s top cocoa producer, which has interrupted exports. Sugar as a commodity is also up 60 percent compared with last year. Hershey’s said earlier this year it would increase wholesale prices an average 9.7 percent. “That’s the closest we’ve come to a price shock,” Gorham says. (In Vons supermarkets, a 12-ounce bag of Hershey Kisses is already up 12.53 percent from last May, according to The Grocery Game.)

Save: Buy only when it’s on sale, and make sure you use a coupon. Teri Gault of The Grocery Game says most items only go on sale once every 12 weeks. Shop the sale and think about what you will need in that time frame, and not just what you need right now, to avoid paying full price once you’re actually out. Chocolate is versatile — you can melt it, chop it, and shave it to get the right texture for a recipe — so broaden your sale search to include drugstores, where candy more often goes on sale, and different types, such as kisses or bars to sub in for chips.

2) Coffee

Bad weather in top-producing Brazil and Colombia led Bloomberg to project this week that coffee commodity prices could rise 40 percent. The bad news: they’re already up 60 percent compared with last year. Kraft (which makes Maxwell House), J.M. Smucker (Folgers) and Starbucks have all raised prices on packaged bean and ground coffee this year by as much as 12 percent.

Save: Be flexible about the brands and stores you shop, says  “Coupon Mom” Stephanie Nelson. Shop whichever store has the best prices for the items you need in a particular week, and whatever brand has the best sale or coupon. Do buy coffee at the supermarket, too, instead of a cup at a time at a coffee shop. It’s cheaper even as bean prices rise, making this a good time to reconsider buying a coffee machine and making your own brew at home.

3) Meat

Prices for meat, poultry, fish and eggs — which the Labor Department counts as one category — rose 1.1 percent from March to April of this year, and are up 7.6 percent collectively since last year. Some of the bigger increases are going to be felt here, Gorham says, because the animals eat grains such as corn and wheat, whose prices are also up. There’s also more demand for meat as fast-developing nations like China and India add a middle class who can suddenly afford to consume more protein.

Save: Consider joining a warehouse club, Gorham says.  “Those larger chains can really pressure the food and drink makers and pass through lower prices to the consumer,” he says. By some estimates, prices are 10 percent to 30 percent lower on meats and dairy, helping offset annual membership fees if you shop there regularly. Buying in bulk on other items can often help you save, too — and club chain B.J.’s also accepts manufacturers coupons. Eating less meat can also reduce your food bill and help the environment, and lead to some creative meals.

4) Packaged foods

General Mills, Kraft and Sara Lee are among the long list of companies announcing recent price increases for foods as varied as soda pop, frozen meals, cereal and packaged deli meats. The big culprit: oil, which impacts the price of manufacturing, packaging (especially plastic) and transportation. “There’s nowhere to hide from rising gas prices,” Gorham says.

Save: Intensify your coupon strategies. Nelson points out that many stores offer coupons online that load directly onto your store discount card, as well as web coupons you can print. RedPlum’s Lisa Reynolds says roughly a third of manufacturers only send coupons upon request, so it can’t hurt to call a few toll-free numbers for favored brands. Think of it as another reason to add more fresh foods into your diet via a farmer’s market or farm share, too — fresh fruit and vegetable prices, although up from last year, dropped 1.3% in April, according to the Labor Department.

Frugal Foodie is a journalist based in New York City who spends her days writing about personal finance and obsessing about what she’ll have for dinner. Chat with her on Twitter through @MintFoodie.

Photo credit: Auswandern Malaysia