The largest two-month drop ever recorded in grocery food prices offset higher housing and transportation costs to produce a modest increase in consumer prices in Washington during April and May.
Consumer prices rose 0.9 percent for the two-month period compared with a 2.1 percent increase during February and March. This improvement resulted from the dramatic 5.1 percent drop in grocery store prices, producing a victory for consumers in the Washington supermarket price wars.
The 0.9 percent rise in consumer prices means items costing $100 in 1967 now would cost $246.70 if their prices rose with inflation.
Grocery food costs during February and March had increased 0.5 percent, following a 1.5 percent increase in December and January. Part of the drop in the past two months was due to the seasonal abundance of fresh fruits and vegetables and the cyclical supply of beef and pork, according to Floyd Rabil, a Labor Department economist. Nationally, grocery prices declined 0.5 percent in May and 0.2 percent in April.
Meat, poultry and fish dropped 6.4 percent during April in the Washington area but rose 1.4 percent in May. Vegetable and fruit prices dropped 0.2 percent in April and 5.9 percent in May, while cereal and bakery goods costs declined 0.5 percent in April and 0.7 percent in May.
A large drop in meat costs is due partly to lower beef prices caused by greater beef supplies during the past four or five months. Those prices were pushed down even farther because of the abundance of pork and its subsequent low price, Rabil said. Meat prices, however, often rise during the summer when breeders allow their herds to graze on the range rather than ship them to market, Rabil said.
But the drop in grocery prices, the greatest decline in the 28 years that records have been kept, was largely due to what is becoming the Great Supermarket War.
"One thing about Washington and some other areas," said Jack Cergol, spokesman for the Food Marketing Institute, is the supermarket business "is an extremely competitive industry. Our profit margin is very small. The name of the game is volume."
Cergol said the supermarket war broke out with a skirmish started by Basics, a discount food chain operated by Grand Union, and Plus outlets operated by A&P, which invaded Washington about two years ago. The first Basics covered some of the same marketing territory as Giant, which had to cut prices to compete, Cergol said. The warehouse pricing system was expanded within Giant, and Safeway soon entered the fray.
The drop in the Washington area was greater than the national decline partly because this area is a latecomer in the warehouse pricing war that has already captured consumers in other locales, Labor's Rabil said.
Transportation costs, including new and used cars and their maintenance, rose 1.6 percent during the past two months. The cost of entertainment increased 3.5 percent, a result of higher-priced toys, hobbies and memberships, the Labor Department said.
Housing prices, including rent, heating fuels, mortgage costs and household furnishings, rose 2 percent during April and May.