RETAIL PRICES OF FOOD

Transcription

1 RETAIL PRICES OF FOOD ^ 6 0 INDEXES AND AVERAGE PRICES Bulletin No November 1961 UNITED STATES DEPARTMENT OF LABOR Arthur J. G oldberg, Secretary BUREAU OF LABOR STATISTICS Ewan Claque, Commissioner For sale b y the Superintendent of Docum ents, U.S. G overnm ent Printing O ffic e, W ashington 2 5, D.C. Price 4 0 cents

2 PREFACE This bulletin, Retail Prices of Food , contains statistical data on retail food prices and indexes for the period Included are discussions on the trend of prices of the major food subgroups, a description of the retail food price index and specifications of the items priced. This bulletin was prepared in the Bureau*s Division of Consumer Prices and Price Indexes by W. H. Zimmerman under the direction of Doris P. Rothwell, Chief, Branch of Consumer Prices. Major contributions were made by Doris K. Stevenson on the analyses of price movements and by Frances H. Briggs on the statistical tables. i i

3 CONTENTS Page Summary Changes in retail food prices by cities Trend in prices of major food subgroups Fruits and vegetables Meats, poultry, and fish Dairy products Cereals and bakery products Other foods at home TABLES 1. Percent changes in retail food prices in the United States for selected periods 1 2. Percent changes in retail food prices in 20 large cities, by city and by subgroup, December 1958-December Indexes of retail prices of food in the United States, by commodity group, by year, Indexes of retail prices of food in the United States, by commodity group, by month, December 1957-December Indexes of retail prices of food by commodity group, by city for 20 large cities, by year and month, 1959 and Indexes of retail prices of principal foods in the United States, by month, 1959 and Average retail prices of principal foods in the United States, by month, 1959 and Annual average retail prices of principal foods by city, 1959 and Estimated worktime required to buy certain food items, September 1953 and September CHARTS 1. Retail prices of foods, United States, iv 2. Retail prices for groups of foods, United States, v 3. Retail prices for subgroups of meat and poultry, United States, vi 4. Retail prices for subgroups of fruits and vegetables, United States, vii 5. Retail all foods price index compared with all commodities, all items less food, and all services, United States, viii 6. Trend of retail food prices compared with wholesale price indexes for special commodity groups, United States, ix APPENDIX The retail food price index--- * A brief description of the retail food price index Index base period Sample of cities Food at home Collection of prices Processing Sample of stores Sample of food items Food away from home Correction procedures for published price indexes and prices Prices or indexes for individual items Subgroup, group, or all-items indexes Special studies--u.s. Department of Agriculture BLS publications APPENDIX TABLE A. List of foods and relative importance of individual foods and groups of foods included in the retail food price index, December 1950, December 1952, December 1959, and December SPECIFICATIONS Specifications for food items priced in 46 cities, as of January 1959, with changes during i i i

4 Chart 1 IN D E X RETAIL PRICES OF FO O D S United States, l l = 1 0 o IN D E X K. / ' M i j /S V ' H T a ta l F ood 1a T n o m e " 100 j P ' A L L FC> O D S * 'Am m w '0n o i m r i VA, 1 1, J y/// A/ j # / / / WORLD WAR 31^ 9, ^//^<>888SS m r Digitized for FRASER Beginning January 1953, food index includes restaurant meals and other food bought and eaten away from home.

5 Chart 2. RETAIL PRICES FOR GROUPS OF FOODS United States, =100 1 M e a ts, P o u ltry, a n d Fish i n d e x D a ir y P ro d u cts Fruits a n d V e g e ta b le s Fo o ds A w a y from H om e Except where otherw ise specified. _

6 Chart 3. RETAIL PRICES FOR SUBGROUPS OF MEAT AND POULTRY United States, IN D EX IN D EX

7 Chart 4. IN D E X RETAIL PRICES FOR SUBGROUPS OF FRUITS AND VEGETABLES United States, =100 INDEX

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9 Chart 6. TREND OF RETAIL FOOD PRICES COMPARED WITH WHOLESALE PRICE INDEXES FOR SPECIAL COMMODITY GROUPS United States, Wholesale foods include: processed foods, fresh and dried fruits and vegetables, and eggs.

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11 RETAIL PRICES OF FOOD, Summary The index of retail prices of foods in the U.S. Department of Labor's Consumer Price Index was 2*3 percent higher in December 1960 than in December 1958, less than half the increase of 5.1 percent in the previous 2-year period. If In December 1960, retail food prices were 21.4 percent above the average and percent above the 1939 average. The rise in food prices in 1959 and 1960 was substantially less than the increase in prices for other major consumption groups in the Consumer Price Index. During this period, medical care advanced 7.0 percent; transportation, reading and recreation, and personal care, 2 to 5 percent; housing and apparel, 3 percent. 2/ The rise for food was less than half the 5.5 percent increase for services (See chart 5.) Food price changes for selected periods are shown in table 1. Table 1. Percent Changes in Retail Food Prices in the United States for Selected Periods Group and subgroup 1939 to to to 1960 December 1958 to December 1960 Total food Food away from home <l/> (1/) (1/) Total food at home Cereals and bakery products Meats, poultry, and fish o2 Beef and veal Pork Poultry Fish Dairy products Fruits and vegetables Frozen <l/> (1/) Fresh Canned Dried Other food at home Beverages Fats and oils Sugar and sweets Eggs / Data not available. 1/ Unless otherwise indicated, historical comparisons in this bulletin relate to the period December 1958 to December The index numbers are used when computing percentage changes. 2/ See historical series, Consumer Price Index. U.S.: All Items and Major Groups, 1947 Forward Series B-l. Mimeographed tabulation available upon request to the Bureau of Labor Statistics. 1

12 Of the two major components of the food index, Food Away from Home (Restaurant Meals) had a far greater rise over the 2-year period than the index for Food at Home. It increased by 5.5 percent, continuing its steady upward trend, compared to a 1.6-percent increase for Food at Home (chart 2.) The principal reason for the difference in price movements is that food costs comprise only a part of the cost of meals served in restaurants. As in most service industries, increased operating costs, aside from food costs, have been the major reason for the constant upward trend in restaurant prices. Retail grocery prices of food move in response to different factors. Although economic activity and consumer incomes were rising during 1959, retail food prices decreased 1.5 percent. Prices declined from January through May, turned upward in June and July and then moved generally downward during the remainder of the year. The major changes contributing to the 1959 decrease in the overall level of prices of food for home consumption were lower prices for pork, eggs, fats and oils, and coffee, which were partially offset by higher prices for dairy products, fresh fruits and vegetables, and slightly increased prices for beef. The trend reversed itself in Retail prices for food advanced 3.2 percent from December 1959 to December 1960, reflecting an almost continuous upward trend during the year, despite the economic downturn which took place during the last half of the year. Higher prices for dairy products, cereal and bakery products, and pork contributed most to the overall increase. Recent fluctuations in general economic activity have not had much impact on retail food prices. This is due in part to marketing costs which have had an increasingly important influence on food prices, and which have climbed steadily over the past decade. These costs, which include wages, containers, materials, fuel, transportation, taxes and many other costs, are spread over the entire modern marketing system 3/ and are generally fixed costs which are fairly insensitive to short-term fluctuations in the economy. In addition, since consumer demand for food items tends to be relatively inelastic, small, or short-term changes in income normally do not affect demand for food as significantly as the demand for other commodities. In contrast, purchases of consumer durable goods are postponable and their prices are, therefore, more sensitive to changes in the economic climate. Prices for farm products, as well as retail food prices, are more directly affected by a number of complex factors not closely related to the general economy. Total agricultural production during 1959 and 1960 was at record levels, reflecting in part continuing technological improvements which in recent years have greatly increased the capacity of American farms to produce. For example, commercial poultry production has expanded rapidly, as improvements have been made in chicken and turkey breeds and in the technology of raising poultry. As a result, the proportion of poultry to total red meat and poultry production has increased from about one-seventh in 1955 to about one-fifth in 1960, while per capita consumption of poultry increased 31 percent during the same period. Another influence on prices in the agricultural sector of the economy has been the continuation of programs to support farm prices and farm incomes, with resulting impacts on wholesale and retail food prices. Over-production of certain commodities, as well as unusual weather conditions, also have had an effect on food prices, unrelated to the general business cycle. Retail food prices have not increased as fast as disposable income. According to the U.S. Department of Commerce, per capita expenditure for food in 1959 and 1960 amounted to 20 percent of disposable income, compared to the average of 25.6 percent. In 1960, compared with 1953 (the first year for which estimated work-time data were compiled by the Bureau of Labor Statistics), it took 31 percent less time for a production worker in manufac turing industries to earn the equivalent of 1 pound of frying chicken, 25 percent less for a pound of white flour, and 25 percent for a quart of milk. (See table 9.) 3/ Food Costs Retail Prices, Farm Prices, Marketing Spreads. Miscellaneous Publication No. 856, April 1961, (U.S. Department of Agriculture, Agricultural Marketing Service). 2

13 In the long run, fluctuations in economic activity and the degree of economic growth have influenced consumer preferences and the per capita consumption of certain food items* As consumer disposable incomes have increased over the past years, the trend has been toward heavier purchases of meats, fruits and vegetables, partially prepared foods and other higher priced foods, and reduced purchases of cereals, potatoes, and other lower cost foods. These shifts have had an effect on food production and in some cases, on prices for these items* During the period, per capita consumption included 12 percent more dairy products and eggs than in the period, 25 percent more meat, fish and poultry, 50 percent more citrus fruits and tomatoes, and 31 percent more coffee, tea, and cocoa* During the same period, per capita consumption of flour and cereal products decreased 37 percent and potatoes, 33 percent. Price movements in 1959 and 1960 for the five major components of the food at home group (fruits and vegetables; meats, poultry and fish; dairy products; cereals and bakery products; and other foods at home) are compared with those for total food at home in chart 2* During these 2 years, retail prices of fruits and vegetables moved primarily in response to weather conditions and supply situations which were seasonal* Prices of fresh fruits and vegetables fluctuated sharply, but averaged approximately 9 percent higher over the 2 years, while frozen fruits and vegetables decreased by 9 percent* The only subgroup which declined in price was meats, poultry and fish. Meat prices at the end of the 2-year period were between 2 and 3 percent below the prices of 2 years earlier because of larger supplies, particularly of pork, while poultry prices continued at the low levels made possible by more efficient production. Prices of dairy products continued their upward trend begun in 1956 with the sharpest rise occurring for American cheese* Reflecting higher production costs, prices of cereals and bakery products also rose as bread, the most important item in the group, increased over 6 percent* An increase in egg prices of approximately 17 percent exerted the major influence in the other food at home subgroup, which also includes fats and oils, sugar and sweets, nonalcoholic beverages, and miscellaneous foods (including partially prepared foods)* Although egg prices increased over the 2-year period, the annual average price in 1959 was the lowest in several years. Prices for fats and oils decreased almost 7 percent, as lard production increased and more abundant supplies of vegetable oils became available* A new high was established in the per capita consumption of margarine, while the per capita consumption of lard reached a new low* The most significant price change within nonalcoholic beverages was reported for coffee, which decreased 12 percent, continuing a decline begun in December 1956* Granulated sugar prices rose substantially during the last half of 1960, reflecting the cutoff of the Cuban sugar quota* On the average, fruits and vegetables advanced 5*2 percent; dairy products, 4*4 percent; cereals and bakery products, 3*7 percent; and other foods at home, 0*8 percent, while prices of meats, poultry, and fish declined 2*2 percent. Changes in Retail Food Prices by Cities Price changes among the 20 large cities for which data are published separately, ranged from an increase of 3*5 percent to a decrease of 0*4 percent. In 19 of the 20 large cities, the index for total foods, at home and away from home, increased over the 2-year period, December 1958 to December 1960, but in varying amounts depending upon the relative movements of the component groups. In all but two cities Chicago and Cincinnati prices of meats, poultry, and fish decreased, while fruits and vegetables increased in all cities, and the other components in most cities. The greatest increase in total foods (3*5 percent) occurred in Chicago because of greater-than-average advances for dairy products and cereal and bakery products; and a small advance for meats, poultry, and fish, in contrast to the decrease experienced in most cities. The average retail price of round steak in Chicago increased approximately 5 cents per pound from December 1958 to December 1960, 4/ while average prices for the United States decreased 4/ See Retail Food Prices by Cities, monthly BLS release, December 1958 and December

14 fractionally by 0.3 cent per pound. At the beginning of the period, however, Chicago prices for round steak averaged 19.1 cents per pound below the level of United States average prices at that point. Chicago prices for center cut pork chops increased 3.2 cents per pound over the 2-year period, while prices for all 20 cities averaged only slightly higher. In addition, price of milk sold in grocery stores increased 2.5 cents per quart in Chicago, compared with the United States average increase of 0.9 cent per quart, and white bread prices advanced 2.1 cents per loaf, compared with an advance of 1.3 cents in United States average prices for the 2 years. Houston was the only city in which average food prices (total food) declined, with decreases of 7.5 percent for meats, poultry, and fish, and of 2.4 percent for other foods at home, the largest recorded for these two subgroups in any of the 20 cities. Prices of frying chickens dropped 5.5 cents per pound in Houston from December 1958 to December 1960, compared with a decrease of 1 cent per pound in United States average prices. Hamburger prices also dropped sharply by 10.5 cents per pound, while United States average prices declined 2.8 cents per pound during the same period. Smaller than average increases in cereals and bakery products, some fresh fruits and vegetables and larger than average decreases in meats and poultry and a sizable decrease in coffee prices were the principal reasons for lower food prices in Houston. Although average food prices in Portland, Oreg., recorded a fractional advance, foods at home averaged 0.5 percent lower during the 2-year period, influenced by a greater-thanaverage decrease for meats, poultry, and fish and a 2.3 percent decrease for other foods at home. Hamburger prices in Portland, Oreg., declined 9.4 cents per pound, while United States average prices declined 2.8 cents per pound, and prices for bacon declined 8.3 cents per pound, compared with a 3.6 cent per pound decline in United States average prices for the same period. Sharply lower coffee prices contributed to the decrease in the other foods at home subgroup in Portland. Table 2 shows the percentage changes in total foods and its components for the United States and 20 cities over the 2-year period. Fruits and Vegetables Trends in Prices of Major Food Subgroups Average retail prices of fruits and vegetables increased 5.2 percent between December 1958 and December 1960, (table 1) with the major advance (4.5 percent) occurring in At the primary market level, prices for fresh and dried fruits and vegetables averaged 8.8 percent higher in December 1959 than in December 1958, but then fluctuated sharply during 1960, ending the year only 0.3 percent above the December 1958 level. 5J Among the subgroups at retail, prices of fresh fruits and vegetables averaged 9.4 percent higher over the 2-year period. Prices of dried fruits and vegetables went up by 1.2 percent, while average prices of the canned items remained unchanged from their December 1958 levels. In contrast, frozen fruits and vegetables decreased by 9.2 percent in price over the same period. Trends in average retail prices for fresh, canned, and frozen fruits and vegetables from 1947 through 1960 are shown in chart 4. The U.S. Department of Agriculture found that rising marketing costs over the past decade, in addition to fluctuations in the availability of supplies, have had an important effect on the retail prices of fruits and vegetables. From 1950 to 1960, the marketing costs for fruits and vegetables have increased by approximately one-third, contributing substantially to increased retail prices. Transportation costs increased from 1950 to J See Wholesale Prices and Price Indexes, 1959 (BLS Bull. 1295) for price data at primary market level, pertaining to 1959 and prior years. 4

15 Table 2. "Percent Changes in Retail Food Prices in 20 Large Cities, by City and by Subgroup December 1958-December 1960 Total food Food at home Cereals and bakery products Heats, poultry, and fish Dairy products Fruits and vegetables Other foods at home United States Atlanta * Baltimore Boston Chicago Cincinnati Cleveland Detroit Houston Kansas City Los Angeles Minneapolis-Sto Paul New York-Northeastern N.J Philadelphia Pittsburgh o Portland, Oreg St. Louis lo San Francisco Scranton Seattle Washington, D.C

16 because of rate increases and increasing proportion of fresh vegetables produced in areas far from consuming markets. Labor costs, a major component in marketing charges, have increased, but improvements in productivity have kept total labor costs from rising as much as hourly earnings of workers. Costs of most goods and services purchased by marketing firms also have risen during the decade. On the other hand, progressive efficiency in wholesale and retail marketing practices and changes in channels of distribution have held down some of these costs, 6/ Increased prices during 1959 for fresh apples, potatoes, and tomatoes (table 7), reflecting higher primary market prices, were the major factors contributing to the upward trend of the retail fruits and vegetables index for that year. Although marketing costs dropped slightly in 1959 from the peak levels reached in 1958, the effect on retail prices in 1959 was more than offset by the higher prices received by growers. These higher prices resulted from smaller supplies which were due to reduced production and adverse growing conditions. On the other hand, overall lower prices to producers in 1960, combined with a 2-percent rise in the marketing bill, caused a small net increase in average retail prices for the fruits and vegetables group (table 3), TJ In the fresh fruits and vegetables subgroup, higher prices for apples, citrus fruit, potatoes, and tomatoes were almost offset by lower prices for lettuce, celery, green beans, carrots and cabbage. Average prices for processed items, both frozen and canned, decreased during I960, Fresh Vegetables. Supplies of most vegetables for fresh market sale in 1959 were substantially less than a year earlier, while supplies of the processed vegetables, both canned and frozen, were comparatively abundant. In contrast, most fresh vegetables, with the exception of potatoes and tomatoes, were in abundant supply during 1960, while remaining supplies of canned and frozen items were somewhat reduced from the previous year. The changes in the supply situation for fresh vegetables during the 2 years resulted in a retail price increase for all fresh vegetables combined, which was somewhat larger than the price increase for fresh fruits over the same period. Potato prices rose sharply during the first half of 1959 to a high point in June, 73 percent above the December 1958 level, because of reduced winter and early spring production. With early and late summer crops almost equal to the corresponding period in 1958, potato prices then declined seasonally through October 1959, A reduction in the late fall crop of 10 percent from 1958, caused potato prices to rise again by December 1959 to a level 20,4 percent above the previous year end prices. Further, the production of potatoes for harvest during the winter months was much smaller in 1960 than in 1959, because of reduced acreage and severe damage by cold weather in Florida, Prices during the early part of 1960 advanced seasonally to a high point in May, which was more than a third above the December 1959 level and more than 60 percent above December Thereafter, as the supply situation eased with more abundant spring and early summer crops coming to market, potato prices declined gradually to a low point for 1960 in October, still 10,5 percent above October 1959 levels, and ended the year 9,1 percent higher than in December 1959, Prices for tomatoes, one of the most important fresh vegetables in the index, fluctuate sharply with availability of winter and early spring supplies in northern markets. Severe setbacks to the tomato crop in Florida, owing to inclement weather in December 1958, caused a sharp price increase in January Further substantial advances were recorded in April and May 1959 when unfavorable weather conditions in Florida and Texas curtailed 6/ The Marketing and Transportation Situation, January 1960, p. 38. (U.S, Department of Agriculture) TJ The Marketing and Transportation Situation, January 1961, p. 8. (U.S,Department of Agriculture). 6

17 supplies of early spring tomatoes. Seasonal trends in prices prevailed until December 1959, when adverse weather in Florida again caused higher prices, which averaged 12.1 percent above those of December Although freezing weather in January 1960 sharply reduced the Florida winter production of tomatoes to less than half that of 1959, prices dropped moderately in February and March, with supplies supplemented by heavy imports from Mexico and Cuba. Beginning in May 1960, with the influx of abundant late spring and summer crops, tomato prices followed normal downward trends through September to a point 9 percent below September 1959 prices. Subsequent to the loss of more than a third of Florida acreage during hurricane Donna early in September, tomato prices rose seasonally during October and Noven&er I960. Severe freezing weather in Florida during December, for the third year in succession, caused prices to rise 57.2 percent higher than a month earlier, and 12.4 percent above the level of December 1959 (table 6). Steady growth in consumer demand for fresh vegetables such as tomatoes, as a result of higher average incomes, and reductions in available seasonal supplies caused by adverse weather, contributed largely to the overall increase of 26.1 percent in tomato prices from December 1958 to December I960. Prices of green beans, like those for tomatoes and other tender crops, tend to fluctuate widely with the availability of supplies from principal winter-and early spring-producing areas. During the first 2 months of 1959, green bean prices jumped nearly 40 percent as a result of freezing weather followed by excessive rains in Florida, one of the principal sources of winter vegetables. Subsequently, prices followed seasonal trends until November 1959, when significantly lighter fall production caused a sharp advance above October prices. In December 1959, prices for green beans were 42.1 percent higher than the level of December 1958, again influenced by bad weather in Florida. During February and March 1960, green bean prices rose to the highest point of the 2-year period, as supplies were sharply curtailed by late January freezes in Florida. As shipments of early spring crops picked up in April and May, prices decreased to a seasonal low point in August, slightly above August 1959 levels. During the remainder of the 1960 season, supplies of green beans were approximately the same as a year earlier, despite some losses suffered in Florida during hurricane Donna in early September. Prices moved seasonally upward to a level in December 1960 which was 25.4 percent lower than the abnormally high prices of December 1959, and only 6 percent above December 1958 prices. Cabbage prices followed much the same pattern as green bean prices over the 2-year period, although price fluctuations were larger than those for green beans. With supplies of spring cabbage slightly larger than the previous year's crops, cabbage prices declined seasonally during the first half of Production of summer and fall cabbage fell sub* stantially below the 1958 level, as well as the average, contributing to the steady increase in prices during the latter part of In December 1959, prices were 57.2 percent above December 1958 levels, reflecting very limited storage stocks and a 15-percent reduction in new cabbage production. During the early part of 1960, normal seasonal price decreases were retarded by supplies which were comparatively smaller than during the same period in After the year's low point was reached in October 1960, cabbage prices rose to a December level, still 30 percent lower than the abnormally high prices in December This trend was the result of plentiful supplies from fall cabbage crops which were substantially larger than the 1959 short crops. Despite wide fluctuations, cabbage prices increased only one-tenth over the 2-year period. Lettuce prices followed a similar price pattern during 1959 and 1960, although the changes were not as exaggerated as those for green beans and cabbage. Prices in 1959 declined after February to a seasonal low point in May, then rose to the year's high in October, and closed the year 6.2 percent above December 1958 levels, influenced by lighter production of lettuce in 1959 than the previous year. During early 1960, lettuce prices were generally above the corresponding period in 1959, affected by some production loss in Florida and delayed harvesting in other areas due to cold, wet weather. With the exception of July, when 7

18 available local supplies were limited, prices during the remainder of the year were usually under 1959 levels. As the result of much heavier lettuce production in 1960, prices in December 1960 were 19.6 percent below December 1959, and 14.6 percent below December Celery prices followed a pattern similar to lettuce, cabbage, and green beans, but with variations less marked during the 2 years. Slightly smaller supplies in 1959 produced prices in December only 2.9 percent higher than in December With the important California crop up 3 percent in 1960, and larger supplies, at the end of the year, than in the previous year, celery prices declined 17.2 percent from December 1959 and 14.8 percent on the overall for the 2-year period. Carrot prices followed trends similar to those for cabbage with a 6.7 percent increase during 1959, and a decrease of 3 percent in 1960, resulting in a net increase of 3.5 percent over the 2-year period. In contrast, prices for sweetpotatoes fell during 1959 because of a heavier production, and increased sharply during 1960 with supplies one-fifth smaller than the year before, reaching a point in December 1960 only 2.7 percent above prices in December Larger available supplies of dry onions during both years held onion prices 9.4 percent below the levels of December Fresh Fruits. The increase in fresh fruit prices, although smaller than for fresh vegetables, contributed in part to the 2-year advance in average prices for the fruit and vegetables group. A relatively small increase in 1959 was followed by a rise of 5.1 percent in 1960, owing to substantially higher prices for apples and citrus fruits during the latter half of the year. These increases were partially offset during 1960 by lower prices for peaches, grapes, and watermelons--all in good supply. Only two of the fresh fruits--bananas and grapes--recorded a decrease in average prices over the 2-year period. Apple prices increased moderately (from December 1958) during the first half of 1959 to a seasonal high in June 24.1 percent under the previous year's abnormally high midyear prices. A reduction of 9 percent in the 1959 apple crop, with the sharpest drop occurring in the Western States, resulted in smaller year end stocks in 1959 than in 1958, and in a price increase 5.8 percent above December During early 1960, apple prices fluctuated around 1959 levels, and then, because of smaller cold storage stocks, increased sharply from March to the seasonal high in July, 34 percent above the previous year's highest point. Prices continued above 1959 levels for the last half of the year, with prices in December 1960, 11.4 percent above December Increased consumer demand for fresh apples, as a substitute for reduced citrus supplies, plus a 13 percent smaller apple crop in 1960, which was due to wet, cold weather, contributed to the unusual price increase from December 1959 to December I960. Although larger commercial plantings have built up production during recent years, increased domestic demand for fresh apples, attributable to higher average income levels and larger export volumes--a result of fewer Import restrictions and continuing European prosperity--have been factors in the upward trend in apple prices in 1959 and Orange prices in 1959 followed seasonal trends at levels below the relatively high prices in 1958, when the Florida crop was severely curtailed by freezing temperatures in December 1957 and January With heavier supplies of Florida oranges during late spring and early summer, and the California Valencia crop 1^ times that of the previous year, prices for oranges recorded a 1959 high in October of 70.5 cents per dozen, 19.5 percent below the record high a year earlier. During early 1960, prices held near 1959 levels, with remaining supplies of Florida and California oranges reduced by strong demand for both fresh market shipment and processing. In April, prices started upward because of a lighter crop of California Valencias in 1960 than in the previous year. With production of Florida oranges somewhat smaller in 1960 than in 1959, and the movement to market delayed by the effects of hurricand Donna, prices for oranges reached a record high of 87.5 cents per dozen in October. By the end of the year, owing to generally smaller market supplies and continuing strong demand, orange prices were 11.4 percent above those in December 1959, and 6.5 percent higher than in December

19 Among other citrus fruit, prices of lemons, during 1959 and the first half of 1960, fluctuated around 1958 levels, with remaining supplies about the same as a year earlier. In September 1960, prices of lemons for fresh use began to climb because of lighter-than-average supplies, a result of smaller crops in both California and Arizona. Lemon prices in December 1960 averaged 15.7 percent higher than in December 1959, for a total increase of more than 20 percent from December Grapefruit prices increased 5«3 percent over the 2-year period. December 1959 prices for grapefruit were 1.0 percent under the December 1958 level, as new grapefruit crops in Florida and Texas matured a few weeks earlier than in 1958, causing lower average prices. Despite heavy loss of grapefruit from hurricane Donna, the 1960 Florida crop averaged about the same as in 1959, while Texas production was 29 percent larger, and Arizona production down a fifth from the previous year. Delays in the harvest and sale of the fall Florida crop, owing to the hurricane, resulted in extremely high prices for grapefruit in September and October 1960, and December prices 6.4 percent above December 1959 levels. Important developments in citrus production in the United States since 1950 include (1) a rising trend in total production, (2) increased dominance of Florida in producing oranges and grapefruit, (3) increased emphasis on processing, and (4) shifts in consumption from fresh citrus to processed items, especially frozen orange juice concentrate. Larger than usual imports of bananas from Ecuador, Panama, and Costa Rica during 1959 contributed to a price decline of 8 percent from December 1958 to December Prices of bananas during 1960, however, remained near 1959 levels, advancing by December 1960 fractionally above prices a year earlier. Over the 2-year period, banana prices decreased 7.9 percent, recording the only decline among the important fresh fruits. Increased banana supplies have been partially offset by increased per capita consumption over the years. In 1959, per capita consumption reached almost 23 pounds, higher than the consumption level for either fresh oranges or fresh apples. Seasonal fruits such as strawberries, peaches, and grapes in the first month of the season generally retail at much higher prices than at the close of the previous season. Retail prices for strawberries were higher in both 1959 and 1960, owing to smaller than average crops, and recorded a 2-year increase of approximately 10 percent from June 1958 to June I960. A smaller peach crop in 1959, followed by a heavy crop in 1960, resulted in a 2-year increase (between September of 1958 and 1960) of about 15 percent in retail prices for peaches. Heavier than normal supplies of grapes during both years caused a net decline of about 11 percent in average prices for grapes over the period October 1958 to October I960. Processed Fruits and Vegetables. In contrast to fresh fruits and vegetables, prices of frozen fruits and vegetables moved downward during 1959 and ended the year 6.8 percent below the December 1958 level. Although prices for frozen peas and green beans declined over the year by 0.9 and 1.7 percent, respectively, the chief factor in the group s declining price movement was the decrease of 12.4 percent in average prices of frozen orange juice concentrate. Beginning in January 1959, prices of this concentrate decreased sharply as supplies became available from the record Florida pack which was 40 percent above the pack and 11 percent above the previous record in Although the pack of Florida frozen orange juice concentrate in the season was smaller than the record output, substantially larger carryover stocks from the fall of 1959 contributed to moderately declining prices, 7.3 percent lower by December 1960 than a year earlier. Despite increasing consumer demand, average prices of frozen orange juice concentrate declined 18.8 percent over the 2-year period, principally because of increasing production, as more oranges were diverted from fresh to processing use. The 1960 packs of frozen strawberries, green peas, and green beans were somewhat reduced by poor growing conditions. Abnormally large stocks, however, were carried over from the previous season, and overall supplies in 1960 remained nearly the same as in The continued high level of demand and higher processing and distribution costs, however, were factors in rising prices for these frozen items during 1960, resulting in 2 years1 9

20 average increases of 1.7 percent for strawberries, 3.7 percent for green peas, and 0.5 percent for green beans. Frozen lemonade concentrate and frozen french fried potatoes were added to the index in April During the 9 months of 1960 in which these items were priced, frozen lemonade concentrate decreased 3.6 percent, and french fried potatoes increased 0.5 percent. The prices of canned fruits and vegetables fluctuated narrowly over the 2-year period, December 1958 to December 1960, with a fractional increase in 1959 offset by a corresponding decrease in During 1959, the slightly higher prices for the group were influenced chiefly by the advance in canned orange juice prices. A reduction in the pack of canned orange juice in Florida, down 26 percent from the previous season, combined with lighter than normal carryover stocks, caused prices to increase by 7.7 percent from December 1958 to the end of For other canned items, larger packs and heavy carryover stocks were the primary factors in the price declines of peaches, fruit cocktail, peas, and tomatoes, but these declines were not sufficient to offset the increased prices during 1959 of canned orange juice, pineapple, and sweet corn. After reaching a price of 49.7 cents per 46-ounce can in December 1959, canned orange juice fell to 43.4 cents in December 1960, a decrease of 12.6 percent which reflected heavy production and record stocks on hand during the year. Prices of canned peaches also declined slightly in 1960 because of continuing heavy supplies. With the exception of canned orange juice and peaches, all other canned fruits and vegetables recorded higher average prices in December 1960 than a year earlier. Smaller supplies of some items, particularly corn, peas, and tomatoes, increased processing and distribution costs, and a continuing high level of demand, were primary factors in the increases recorded for canned fruits and vegetables during An increase of 5.2 percent in canned baby food prices, from December 1959 to December 1960, was attributed to higher producing costs. The index for canned fruits and vegetables as a group, unchanged at the end of the 2-year period, reflected decreases of 5.9 percent for canned orange juice, 4.0 percent for peaches, 1.7 percent for fruit cocktail, and 1.0 percent for canned tomatoes which were offset by increases of 7 7 percent for canned pineapple, 8.5 percent for corn, 2.7 percent for green peas, and 5.3 percent for canned baby foods. Dried fruit and vegetable prices averaged higher in 1960 than in 1959, with an increase of 1.2 percent above December 1958 levels. Relatively short stocks of prunes on hand from the unusually light tonnage dried in 1958, caused growers' prices to increase sharply and retail prices to rise 6.5 percent over the 2-year period. A decline of 4.2 percent in prices of dried pea beans, reflecting heavy supplies in 1959 and 1960, was not sufficient to offset the upward price movement of dried prunes during the same period. Meats, Poultry, and Fish In contrast to increases for the other four food subgroups, prices of meats, poultry, and fish decreased 2.2 percent on the average during 1959 and Price movements for items within the subgroup showed diverse trends. (See chart 3.) Poultry prices which continued at low levels in response to large supplies, did not change over the 2-year period despite month-to-month variations. Meat prices fluctuated in response to usual seasonal influences, as well as to cyclical changes in supply, finishing the 2-year period 2.8 percent below prices in December 1958, with decreases much more pronounced for pork than for beef and veal. Movements at retail, although moderate, were a direct reflection of similar movements in prices of meats and livestock in primary markets. Packers' prices of meats decreased 5.5 percent and prices of livestock, 7.1 percent over the 2 years. Prices of both livestock and meats in primary markets reached a low point for the 2 years in December 1959, while retail prices continued to decrease through February

21 Hog numbers and pork production (as well as cattle and beef) run in cycles determined in part by the biological characteristics of production and in part by other circumstances. The hog production cycle in recent years has been characterized by about 2 years of increase followed by 2 years of decrease in the spring pig crops (December to May) Spring pig crops increased in 1954 and 1955, decreased in 1956 and 1957, increased again in 1958 and 1959, and decreased in I960. The effects of cyclical changes in hog numbers and pork production were apparent in a 3 percent decrease in pork prices from December 1958 to the end of The previous downswing of production, which ended in July 1958 with the highest pork prices in several years, was followed by declining prices to the end of 1959 as production increased, except for a small seasonal increase in the late spring and early summer. Beginning in March 1960, however, pork prices increased when the effects of cutbacks in hog production began to appear in reduced hog slaughter. The increase was more rapid than usual up to midyear, and prices failed to show the usual seasonal decline to December. The general decline in prices of pork chops from December 1958 up to March 1960 was followed by a sharp rise in July Little or no seasonal decrease occurred thereafter, and prices of chops in December 1960 were fractionally higher than in December Bacon prices fluctuated more widely, decreasing 20 percent to the end of 1959 and rising thereafter to a point in December 1960 only 4.9 percent lower than in December Ham prices followed the general pattern of movement of other pork products, finishing the period 6.2 percent lower than in December Cattle cycles are much longer than those for hogs. Earlier cycles in cattle numbers through 1928 approximated 17 years in length from low point to low point. Recent cycles have become shorter; from 1938 to 1949, a period of 11 years, and from 1949 to 1958, a period of 9 years. The shortening of the cycles appears to be related in part to improvements in feeding practices and care which result in production of meat animals of desirable quality and weight at younger ages. The years 1959 and 1960 fell in the early expansion period of cattle numbers and beef production. The previous cycle had culminated in peak cattle numbers in 1955 and beef production in Thereafter, both numbers and production of cattle and of beef fell until 1958, when the turn in the cycle occurred. Beef and veal prices decreased 1.5 percent over the period, following the sharp increases of 1957 and 1958, reflecting the general increase in supplies, in the face of continued strong demand. Per capita consumption of beef increased from 80.5 pounds in 1958 to 81.4 pounds in 1959 and 85.2 pounds in 1960, only slightly below the 1956 record high. Consumption of beef in 1960 was more than a third higher than in 1950, reflecting consumer preference for beef over other meats and higher income levels. Prices of round steak, chuck roast, and rib roast in 1960 were running generally below those of A slight downward tendency of prices for beef items in both years, in contrast to the generally rising tendencies of 1958, resulted in small net changes over the period for round steak (-0.2 percent) and rib roast (+0.5 percent). Chuck roast, however, decreased 3.1 percent. Hamburger prices, also, influenced by some increase in slaughter of cows from the low levels which prevailed through October 1959, decreased substantially in the late months of 1959 and early months of 1960 and continued to decrease more slowly thereafter. By the end of 1960, prices of hamburger averaged 4.9 percent below prices in December Veal production was influenced by the withholding of calves to increase cattle herds over the period and, as a result, prices of veal cutlets completed the period 2.9 percent above December 1958 levels. The contrast between declining prices of beef and increasing prices for dairy products is related to the continuing decreases in numbers of cattle for milk production, which has 11

22 been in progress since Although output of milk per cow has been increasing, per capita consumption of dairy products has been decreasing. Increasing slaughter of lambs over the 2 years, particularly at the height of the marketing season in the late fall and winter months, was accompanied by lower prices for leg of lamb in both 1959 and I960. Prices of frankfurters and luncheon meat responded to increasing supplies of lower grade beef and reduced prices of pork. During the 2 years, prices declined 4.2 and 5.2 percent, respectively. Prices of frying chickens in December 1958 were the lowest recorded up to that time, and little further decline occurred during 1959 and Annual average prices of frying chickens were lower than in any preceding year for which data are available; and those for 1960 were 27.5 percent below 1950 prices. 8/ Increasing production in 1959 was reflected in the failure of prices to rise from seasonal lows to levels of the corresponding months of 1958o For example, continued large supplies in both years held down the seasonal increases usually experienced in the postholiday months. Prices returned to nearly the same levels in December 1959 and 1960 as in 1958, perhaps because these prices represented about the minimums at which production could be efficiently maintained. Development of chickens which attain marketable weight in less time, on less feed of improved formulation and large supplies of feed grains, combined with improvements in production techniques, allowing one man to care for many more chickens than he could a few years ago, have reduced costs of raising frying chickens sufficiently to support the greatly increased output at sharply lower prices. Per capita consumption of chickens, which was at a record of 28.3 pounds in 1958, remained at high levels in 1959 and 1960, as consumers took advantage of the low prices. increase in consumption was sharp from 1955 to 1960 (32 percent) a direct effect of the rapid downturn in prices over that period. The Fish prices increased fractionally over the 2-year period from December 1958 to December 1960 (table 1). Canned salmon rose in price, particularly in 1960, following reduced production. Some increases in canned tuna supplies in 1959 and 1960 were accompanied by prices somewhat lower than in Fresh fish prices showed little change, on the average. Dairy Products Prices of dairy products increased 4.4 percent between December 1958 and December 1960, continuing the upward trend begun in (See chart 2.) A slight decline in total United States milk production from 1958 levels, changing patterns in consumption of certain dairy products, and channeling o f a larger share of milk production to manufactured dairy products were significant developments in the dairy products area over the 2-year period. Retail prices of fluid milk, bought in stores as well as delivered to homes, averaged about 4 percent higher between December 1958 and December I960. Within each of the 2 years, milk prices fluctuated seasonally, declining during the spring months to a low point around mid-year, and then rising during the remainder of the year. The rise in milk prices over the For indexes of average annual retail prices of food in 1950, on a base, see Retail Prices of Food, (BLS Bull. 1217), table 6, pp Monthly indexes presented in Retail Prices of Food,1950 (BLS Bull. 1055), table 6, on a base may be converted to a base by means of conversion factors published in Retail Prices of Food, (BLS Bull. 1183), table C, p