Milk at $3 a gallon?

I ran a search on the above phrase and didn't find anything, so here's a quick post about surviving price inflation in the grocery stores.

Most of us don't think of food as an expensive part of our budget. The mortgage, the phone bill, and especially the gas bill seem to be getting all of the attention lately (if you're lucky, and live in an area with a great selection of grocery stores, bakery thrift shops, outlet grocery stores, and produce markets, you have lots of options. Just watch for the sales and stock up.) However, if you go through your bank statement each month and add up all those trips to the store, you might find your food bill adding up to $200, $300, or more, depending on how many you have to feed and what your tastes are.

Is price inflation a reality? Even though you still may be able to find the same food for the same price, you should consider that most of the food we buy at the store arrives by truck. Trucks run on gas. Gas is $3 a gallon. Now milk is $3 a gallon (Congress has passed a farm subsidy bill that makes domestic corn too expensive to feed to cattle and hogs. What are they eating? Don't ask. Upshot is, meat's going to get expensive too.) The cheap food we find at the stores is more likely to have been imported from around the world than ever before. As transportation costs go up, so will the bottom line cost of our groceries.

As housewives, we cannot afford to be blase about this. Grocery costs, while not within our control, are nevertheless easier for us to manage than some other costs we have to pay every month. With a little patience and keen observation, you can save enough money at the store to offset other costs, such as the cost of fuel, where you can't control your consumption.

I can't blog endlessly about all the techniques, but I can tell you where I learned them. The Complete Tightwad Gazette is my money-management Bible, a series of newsletters written by a determined housewife in the midst of the bear markets of the early 90's. We could be headed there again, folks. Prepare thyselves. You can pick up this book for under twenty bucks and save thousands.

Or, if you prefer a quicker (albeit less complete) online resource, try Hillbilly Housewife. This link will take you straight to her page about powdered milk and from there you can browse. She has a great section on emergency menus and food budgets.

The stocking up part is important. Don't just buy what you need for the next week or two weeks, thinking you're going to be able to get the same prices several weeks or a month from now. Try to store up to at least three months worth of non-perishables. I discovered this when I walked into Wal-Mart (having been without milk for a week) and saw the sticker price. I bought $200 worth of groceries, but no milk. Crazy? No, just stocking up on the staples that I could still find at my accustomed prices. Luckily, another "saver" supermarket had a stock of powdered milk at the "old" price--less than $2 a gallon.

Take along a calculator because you can't always count on the "unit cost" listed on the label. This is especially true at Costco. We quit going there when I realized we spent more money on convenience foods and paperback books, and I could find my staples at the same prices or better on sale or at the discount market. It's difficult to overdo the pantry principle. My grandmother kept, until the end of her life, an enormous wall-to-wall closet full of packaged food she had purchased on sale, as well as a freezer in her garage similarly packed. I once read some advice from the 70's that one of the best ways to beat inflation was to keep a year's worth of food on hand. The 12-month investment gave a better return than the stock market at the time!

Not to be too much of a doom-and-gloomer, but today's economic indicators are far worse than they were in the seventies. That was three decades' worth of deficit spending ago. The US now owes so much money that we can never pay it back. No joking. You can't blame any one particular president or administration either (unless you want to blame Nixon for taking us off the gold standard). One administration takes from military spending and pours money into entitlements. The next administration sustains this level of spending and then pours more money back into the military. Meanwhile the Fed keeps cranking out greenbacks and selling them overseas to finance the debt, while manipulating interest rates to keep the markets going at home and the voters happy and feeling like they're getting richer. The result is an illusion, a bubble of "false wealth" that cannot be sustained. More details here.

And here.

And here.