The calm before the storm for food prices?

Here's some news that won't settle your stomach: We're going to have to pay an additional 3 to 5 percent or more for food this year. That's according to Michael Swanson, an agricultural economist at Wells Fargo in Minneapolis. Commodities such as corn, beef and wheat hit record highs in January, Swanson said, and prices will likely head even higher in February and March.

While food prices were up a mild 1.5 percent in 2010, according to the Consumer Price Index, shoppers saw even larger increases on select items such as butter (29 percent increase), coffee (9.5 percent increase) and pork (8 percent increase), according to the Bureau of Labor.

This year, consumers can expect larger increases covering a broader spectrum of foods, said Swanson.

Part of the reason is that manufacturers and retailers will likely quit absorbing higher prices. Last year, they trimmed ounces and inches from packages while holding prices steady. But with profit margins being thin in the supermarket industry, the jig's up.

For grocery shoppers who loosened the purse strings a bit last year, it means pulling up the reins again. For Karen Gunter of Champlin it means buying more when staples are on sale. Gunter, who started her own website, Creativecouponing.com, has noticed that her favorite items don't go on sale as often anymore, including milk, meat, fruits, vegetables, bread, cereal, soda pop, snacks and sugar.

"It used to be pretty easy to find milk for $2 a gallon, but now I might have to pay $2.49 if I run out before a sale," she said.

Generally, consumers try to make small, less painful changes to their shopping habits when food prices go up, said Jean Kinsey, professor emeritus at the Food Industry Center at the University of Minnesota. "We still have to eat."

Trading down the food chain is a common practice when budgets get tight. A Byerly's shopper decides to try Cub, for example, said Kinsey. A Target shopper decides to try more store brands. The numbers bear that out. In an August 2010 survey, 54 percent of consumers said they were buying more store brands. That's up from 46 percent in July 2009, according to SymphonyIRI, a Chicago-based market research firm.

Destiny Brown of Minneapolis said if prices get too high, she'll switch her grocery shopping to Aldi, but for now she prefers the greater variety at Rainbow. Aldi, typically offers savings of 20 to 40 percent on its store labels. The Germany-based supermarket chain, which has 18 Twin Cities locations, will open stores in Crystal, Oak Park Heights and two other sites this year, said Ryan Stemmons, director of real estate for Aldi in Minnesota.

Cheaper but not healthier

One of the biggest chunks of the food budget, beef, is expected to see price increases of 5 percent or more, but Kinsey doesn't expect to see a rise in vegans. "People will still eat meat when it's more expensive, but they'll buy cheaper cuts," she said.

However, she does worry that as prices climb, people will move away from fresher, healthier options to cheaper, processed foods. "The competition for processed foods is fierce, so they're often on sale," she said.

Hazel Brand of Minneapolis is one of those shoppers. When food prices get too high, she switches to cheap frozen dinners on sale. "I can get Banquet dinners for 98 cents on sale at Wal-Mart," she said, but admitted she'd rather buy fresh when she can afford it.

One tactic that probably isn't on the table for most Americans is eating less. "We didn't get to be an overweight society by cutting back," said David Livingston, a supermarket analyst based in Waukesha, Wis.

It may be small comfort to stretched budgets, but Americans have among the cheapest food prices in the world, spending only an average of 12 percent of our personal budgets. The poor, however, who will be hit hardest, spend about 20 to 30 percent.

"High food prices are not a new problem,' said Kinsey, "but it never seems to get solved."

John Ewoldt • 612-673-7633