As Americans Shop For Thanksgiving, They're Finding Cheaper Prices

Grocers know this: Cheap turkeys will get customers into the store.

So this Thanksgiving, despite an avian flu that killed 8 million turkeys, shoppers are having no trouble finding bargain birds priced lower than last year.

In fact, store managers have been slicing all sorts of holiday-related food prices this fall.

On Tuesday, the Labor Department said its consumer price index ticked up a modest 0.2 percent in October, mostly because of higher prices for shelter and medical care. But for food, the increase was just 0.1 percent, the weakest growth rate since May.

And many of the foods you'll be buying for the holidays actually have been getting cheaper. For example, the CPI report showed prices for beef roasts fell 1 percent last month, while candy dropped 0.4 percent. Snacks, gravies, coffee, milk, carbonated beverages, frozen vegetables and cheese — all fell in price last month.

To understand what's happening, let's start with the estimated 46 million turkeys we will be eating in coming days. Earlier this year, you may have heard that an avian flu had hit turkeys hard, so you may have been expecting pricier poultry. Turns out, the turkeys most seriously affected were those used for deli products and sausages.

Still, grocers did have to pay more for the kinds of turkeys Norman Rockwell painted. The USDA's mid-November report on frozen tom turkeys, in the 16-24 pound range, showed that the average wholesale price was $1.35 per pound, up from last year's $1.17.

But when you get to the store register, you probably won't feel that wholesale price hike. In fact, USDA says the retail price of frozen tom turkeys has fallen to an average of 87 cents a pound, compared with last year's 93 cents. That decline might leave you scratching your head and asking: Why are supermarket prices lower than wholesale prices?

Answer: Grocers compete so fiercely that they are willing to lose money on frozen birds to get you into the store.

"Retailers fully expect frozen turkeys to continue to be the draw in supermarket promotions, and prices are expected to remain competitive," USDA spokesman Sam Jones-Ellard said in an email about prices.

Wal-Mart, for example, says it has cut prices so that the typical 16-pound, premium frozen Butterball turkey will cost $17.44 on average nationally, down 64 cents from one year ago.

The USDA says cheaper turkeys also will put downward pressure on prices for roaster chickens and hams in coming days. And with beef-roast prices already sliding, holiday tables likely will be loaded up with protein.

If you want to give thanks for the lower prices, you can direct your gratitude to oil producers. They have kept rivers of crude oil flowing despite oceans of inventories. Amid this over-supply, gasoline prices have been dropping. AAA, the auto club, says regular gasoline is selling for $2.14 a gallon on average, compared with $2.88 a year ago. That is making it cheaper for farmers and truckers to get food to your table.

Other factors are helping, too: A strong dollar is making it cheaper to import fruits, vegetables, wines and cheeses. And that strong dollar, along with slowing growth in other countries, is reducing global demand for U.S. foods, and leaving more available at lower prices for Americans. At the same time, many U.S. farmers have brought in huge harvests of corn, wheat and soybeans.

All of that means the food headed to stores in coming weeks will likely stay cheap. The Labor Department's most recent producer price index showed that in October, wholesale prices for food dropped 0.8 percent for a second straight month. Wholesale eggs showed the biggest cost decline since March 2000.

So if you like eggnog, this really will be a season to be jolly.