The price of gasoline soared, and so did the prices of groceries and nearly everything else.

[raccoon]

Then the price of gas fell. Did the prices of groceries fall, or go back to what they were before? :wtf:

How come THAT never happens?

[newportdadde]

1. I'm sure packages will start getting larger too any time now.

[raccoon]

2. Yeah, you're seeing lots of smaller packages nowadays.

This could fubar recipes that call for, a package of this or that...

[CrispyQ]

3. Screw everyone you can - it's the American way.

A friend who owns a liquor store told me when gas went up, her two main vendors told her they would have to charge her a delivery fee if her order was less than X dollars. Now that gas is low, the policy still applies.

I have also noticed that many items are now lesser in quantity, but still the same price. A package of pasta I used to buy - 16 oz, now 12 oz, cost stayed the same. Sneaky bastards.

[ogneopasno]

4. The same reason that when manufacturing is outsourcing to take advantage of "cheap labor," the price

of the product stays the same. It's two words: PRO and FIT.

[pinqy]

5. Supply v demand

An increase in fuel costs shifts the supply curve up, raising prices. That's a direct effect, so it happens first. The Demand curve will shift down some due to income effect (more money towards fuel means less for everything else) but that effect won't be as strong since it's more diffuse and the demand curve for each good or service will shift differently.

A sudden drop in fuel prices will not immediately cause the costs of production to drop (slight delay based on the lag between production and sales), but will cause an income effect (less spent on fuel means more money for everything else) so the demand curve will shift up. Short run effect is a small increase in prices. After the supply curve shifts back down, there will be a slight decrease, though equilibrium will be higher than at the start of everything.

Now, that's all Econ 101 and in reality the behavior is a lot more complex and things won't work out quite that way, but the basic Supply/Demand model is sufficient to explain why prices for everything else don't drop immediately but increas slightly.

[Sherman A1]

6. As a Grocery Guy

I work in a Grocery Store (35 years now) and my Sunday AM job is to hang the price advances (increases). The ad changes on Monday, but we put up the tags on Sunday AM. The lower prices still ring through the registers until the changeover in the computer in the wee hours of the next morning.

Prices started really going up Jan 1, 2008 and haven't stopped yet. In 2007 I would have 30 to 60 advances per week (1-2 sheets of 30 tags). Since 1/1//08 I have had no less than 10 pages of 50 tags per week. Last week was 14 sheets.



So I will tell you the story I told my in-laws over the holidays when we were discussing grocery prices.

Back in the early to mid 1970's there was a bad freeze in California which pretty much took out the grape crop.

With short supply raisin prices skyrocketed shortly thereafter...........


They haven't come down yet.

[RaleighNCDUer]

7. Yep. Screw supply and demand. The 'temporary' increase gets

people used to buying at that price, and there is no reason to drop the price once the consumer is acculturated to paying it.

The only way to get prices to drop is not shop. Or to boycott. Drive the prices down on a particular item with concerted effort by not buying that item, then when that one drops its price everybody buys ONLY that one, so the competitors have to drop their prices to match.

All it takes is a little determination and a couple million close personal friends to go along with it.

[elocs]

8. I've tried to boycott buying food, but I've found eating is more satisfying than not eating.

Yes, the basic problem of national boycotts is getting those millions of others to go along with it. Local and specific boycotts have a much better chance of success and depending on the item, issue, or motivation it is only a chance.

[Javaman]

9. Because me dear fellow DU'er....

people can go without gas, people can go without new clothes, people can go without a roof over their heads, BUT people can not go without food.

[asjr]

10. I can remember when a can of soup

fed two people. Sure doesn't today.