business

The best news about food prices last month was that they didn't go up, according to the latest figures from the consumer price index, which were released Friday.

Despite a 5.8 percent increase for the past year, food prices fell 0.1 percent for the month of December as commodity and fuel costs fell. The CPI as a whole fell 1 percent in December; it was still 0.1 percent higher than a year earlier.

That was one of the few bright spots in an otherwise troubling trend for the cost of food. Prices rose in nearly every category in the past six months, with sweets up 10.5 percent, fats up 14 percent, cereal up 8.1 percent and meat, poultry, fish and eggs up 5 percent.

Food prices rose last fall even as the broader CPI recorded a historic drop, a result retailers blamed on timing and demand pressures.

More broadly, the CPI fell 1 percent in December, driven largely by falling prices for gasoline. It was the third straight monthly decline. Energy prices fell 77 percent in the last three months of the year, the report said, and now stand about 21 percent below a year ago.

Long-term forecasts indicate food prices will continue to rise this year, with the U.S. Department of Agriculture predicting a 3.5 percent to 4.5 percent hike.

"We've seen food prices moderate during the past few months," said Aaron Sorensen, a spokesman for Lund Food Holdings Inc., owner of Lunds and Byerly's. The commodities boom that fueled the price run-up earlier this year is over, and fuel costs dropped 59.3 percent for the second half of last year.

Sorensen added that suppliers usually don't increase prices during the all-important holiday season, but even seasonally adjusted numbers show food price rises slowing down near the end of last year.

"The dollar has strengthened a bit compared to the euro, so more produce is coming in from places like Chile," he said. "That's helping to keep pricing down."

Agriculture imports should grow $1.7 billion this year to $81 billion, a 2.1 percent increase over last year, according to the U.S. Department of Agriculture.

Fuel costs have helped push fruit and vegetable prices down as well. Raw fruits and vegetables saw a fourth straight month of price declines, dropping 18.4 percent in the last quarter of the year, according to seasonally adjusted figures. The prices fell on a stronger dollar, good crops and lower shipping costs.

This time of year usually sees a lot of imported produce flown and trucked into Minnesota, but with fuel costs sharply lower, many of the fuel surcharges that were tacked onto produce shipments have been removed, said a produce buyer who asked not to be named.

"All of those things are coming off," he said.

Many supermarkets would prefer not to talk about prices -- several local chains called for this story did not return calls -- but Supervalu CEO Jeff Noddle said in his company's most recent quarterly earnings call that he planned to drop prices in some parts of the country, notably the Northeast.

The price reductions would not occur across the board but in selected foods and markets, said a spokeswoman.

Prices for some of the most common fruit and vegetables -- from Red Delicious apples to bananas, iceberg lettuce and dry beans -- dropped an average of 1 percent a year from 1980 to 2006, according to economists at the Agriculture Department.

Matt McKinney • 612-673-7329