Stay-at-Home Grillers on July 4th Still Pay More for Food, Gas

By Alan Bjerga and Shruti Date Singh

July 3 (Bloomberg) -- Rising costs for bread, cheese and propane will make tomorrow's Fourth of July holiday more expensive than last year, even for those Americans who decide to avoid higher gasoline prices by grilling at home.

Bread cost 16 percent more in May than last year, cheese jumped 14 percent, snack foods are up 7.4 percent, and ice cream gained 5.9 percent, Labor Department data show. While hamburger, hot-dog and pork-chop prices are about the same, that's only consolation for consumers who like their meat raw: propane used in grills costs 29 percent more, Energy Department data show.
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``There's not a thing out there that has not gone up in price,'' said Mike Mills, a barbecue-restaurant owner in Murphysboro, Illinois, who is the past president of the National Barbecue Association and a former championship griller. ``It's kind of like you get nickel-and-dimed to death.''

More Americans may cook at home after gasoline rose to a record above $4 a gallon. The number of travelers over July Fourth holiday will drop for the first time this decade, AAA said. The savings on fuel are getting eaten up by the rising costs at the grocery store. Food inflation last year accelerated at the fastest pace in 17 years, and the government forecast a bigger increase in 2008, led by gains in dairy and grain prices.

Mills, who owns the 17th Street Bar & Grill restaurants in southern Illinois and the Memphis Championship Barbecue in Las Vegas, said he will turn the grill on 15 minutes before cooking to conserve propane and charcoal at home this weekend. In the past, he said he'd start an hour earlier.

Cheaper Meats

The price of propane for residential use is forecast to be $2.65 a gallon this month, up from $2.05 last July, according to data on the Energy Information Administration Web site.

Mills also said he will cook pork and chicken rather than the more-expensive beef steaks.

``I am a steak lover,'' Mills said in an interview yesterday. ``I am not going to be doing any steaks.''

Retailers are passing along higher prices to consumers as global demand for food boosts U.S. exports, production is disrupted by harsh weather and more crops are used to make fuel, the U.S. Department of Agriculture said.

The annual gain for cereals and baked goods will be 9 percent to 10 percent, up from 7.5 percent to 8.5 percent forecast in May and the most since 1980, the USDA said in a report June 27. Fats and oils may rise 11.5 percent to 12.5 percent, sugars and sweets may gain 4.5 percent to 5.5 percent, and poultry may jump 3 percent to 4 percent, the USDA said.

More for Ketchup

``It continues to put consumers in a difficult position as food prices rise, especially for low-income consumers,'' said Chris Waldrop, director of the food policy institute at the Consumer Federation of America in Washington. ``It makes it difficult for them to feed families. They have to prepare for the big holiday, whereas in the past they would go to the store without much concern.''

Rising costs for raw materials and energy are putting a crimp on companies as well as consumers. H.J. Heinz Co., the world's biggest ketchup maker, raised prices by 4.5 percent in the quarter ended April 30 to counter record commodity costs. Even beer and ale consumed at home was 2.4 percent more expensive in May than a year earlier, government data show.

Corn, wheat, soybeans and rice have reached records this year, while wholesale beef, pork and chicken rallied. Overall, U.S. food costs may rise as much as 5.5 percent this year, USDA food economist Ephraim Leibtag said in an interview yesterday.

``Food prices are definitely higher in 2008 vs. 2007,'' Leibtag said. ``Some meat-product prices have been pretty stable this year due to large short-term supplies, but that will change'' as higher feed and fuel costs cut production, he said.

To contact the reporters on this story: Shruti Date Singh in Chicago at ssingh28@bloomberg.net; Alan Bjerga in Washington at abjerga@bloomberg.net