Taxes on garage sale proceeds
Tax Carnival #36: A Cinco de Mayo Tax Celebration

Grocery prices getting hard to swallow

I do my weekly grocery shopping on Sundays. I follow the rules suggested by food shopping experts:

  • Make a list and follow it.
  • Search store ads beforehand.
  • Use coupons, but only for items you intended to buy anyway.
  • Buy private label products (except for frozen waffles; Eggo definitely beats HEB's in-house option).
  • Compare unit pricing of the various sizes of products.

Still, over the last few shopping trips, I've noticed that while the items in my cart are roughly the same as they've been for months, the final dollar tally has been rising. Today it was a whopping $140 after coupons.

I did buy a lot of meat products (ground beef, pork chops and chicken) on this one trip. Usually it's only one meat item a week, but our freezer stash got used up because I skipped my regular trip a couple of weeks ago as I was going out of town. The hubby assured me he could make do in my absence with what we already had on hand; I guess he was reliving his college days.

Anyway, the price still freaked me out a bit. I did buy a lot of fresh produce, and that's been going up in price. Thankfully, with Cinco de Mayo tomorrow, avocados were on sale.

Cow_closeup And the prices of milk, cheese and other dairy products, which we tend to eat a lot, have been getting out of control for a while. The only thing I can figure is that the price of feed, which includes corn, is skyrocketing as farmers divert their crops from food to fuel.

So I was particularly intrigued by a feature in today's New York Times that I saw after I finished putting today's groceries in the pantry and refrigerator.

Soapbox is a graphic look at, as the headline says, "All of Inflation's Little Parts." The circular diagram displays the latest numbers form the Bureau of Labor Statistics.

According to the paper, each month BLS gathers 84,000 prices in about 200 categories (e.g., gasoline, bananas, dresses and garbage collection) to create the Consumer Price Index, one measure of inflation. The categories are weighted according to an estimate of what the average American spends.

In the Times' graphic, larger shapes indicate an item that makes up a larger part of spending. The colors represent price changes from last year, with blue hues cheaper and gold and brown tones more expensive.

The online version allows you to mouse over segments for details. In the food section, those dairy items I mentioned are all gold, indicating price hikes of 10-to-20 percent from last year. Eggs are the most expensive in relation to last year, with all those corn-fed hens producing a product that increased almost 30 percent from 2007 to 2008.

Nyt_inflation_interactive_2 Inflation across the board: Other categories in which BLS measures inflation include transportation (gasoline up 26 percent, but the cost of a new vehicle is down slightly; you can afford to buy a new car, just not run it!); health care; housing; education/communication; apparel; recreation; and the ever handy miscellaneous (an intriguing collection, including cigarettes, haircuts and other personal care, laundry and dry cleaning, financial services and legal services).

Housing makes up 42 percent of consumer spending vs. only 15 percent for food and beverages. But since my mortgage payment is the same every month (yeah, we got one of those boring 30-year fixed loans), the cost of my groceries tends to get more of my attention.

I'm sure a lot of folks are in the same situation as the hubby and me. We have to eat, despite what my bathroom scale says! And we've got to do so on a budget that seems to continually shrink.

At most, we get a raise once a year, but, even though economists tell us inflation is only around 4 percent, our living expenses sure seem to go up more than that in each of those 11 other months.

Food taxes, too: I am grateful that here in Texas we don't have to contend with taxes tacked onto to our foodstuffs.

But, according to the Tax Foundation, 14 states do tax groceries. They are listed below, with the applicable tax rate in parentheses if food is not fully taxed at the state's full sales tax rate:

  • Alabama
  • Arkansas (3%)
  • Hawaii
  • Idaho
  • Illinois (1%)
  • Kansas
  • Mississippi
  • Missouri (1.225%)
  • Oklahoma
  • South Dakota
  • Tennessee (5.5%)
  • Utah (1.75%)
  • Virginia (1.5% + 1% local option tax)
  • West Virginia (5%)

The Tax Foundation notes that Idaho's income tax provides a $20 credit per person that is designed to partially offset the impact of taxing groceries. Also, tax publishing and software company CCH cites a Kansas law that allows for a "limited tax refund available to disabled, elderly, and low-income households."

And even in states where there is not state levy on food, some local jurisdictions do collect tax on groceries.

Grocery shopping, uh, fun: Although Sara Noel's post, Adventures in Marriage: Grocery Shopping, at her Frugal Village blog doesn't deal with shelf prices, any wife will find at least part of her account of shared grocery duties priceless and true. All I have to say is thank goodness my hubby is not a bologna fan!

How are you handling rising food prices? Keeping your spouse away from the local food mart? Buying more store brands? Becoming your state's coupon king or queen? Feel free to share your shopping and saving tips by leaving a comment.

Comments

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Ray Harris

At best Pam it is wishful thinking. A one sales tax system would do two things. First it would shrink the size of government, no need for the IRS and the many local agencies that have to monitor this payment. Second it would allow us to all KNOW how much the bill is, if you pay all at one time, you know, but not when its chopped up in to 30 or 40 different taxes.

P.S. Michigan has no sales tax on groceries.

Pamela Baggett-Wallis

Question: I've been listening to friends bellyache about their property taxes going up. My theory is we're going to pay taxes, one way or the other. Since local taxes are deductible from federal taxes, why not be happier to pay locally than to the feds?
Is my theory OK or is it wishful thinking?
Pam

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