Even if you frequent the same grocery store each week, you may notice that the items you regularly purchase change in price from time to time. If you are buying the same brand, quality, and quantity then why are the costs of your goods fluctuating?

There are many external factors influencing the prices associated with your purchases. While some factors may be more obvious than others, it is important to understand why costs rise and drop and how to better gauge how your budget will be affected from month to month.

One major factor, and likely the most obvious, is the law of supply and demand. If consumers believe that a good is worth its price, they will buy it. If consumers believe a good is not worth its price, they will not buy it. If items are flying off store shelves, the demand is high and in return the price will increase. In many instances, when the demand is low, stores will institute sale prices to push store inventory off the shelves.

The law of supply and demand is not the only thing affecting the price of our goods. There are many factors you might not even realize! Let’s take a look at some factors that are easy to understand and can be helpful in predicting your grocery bill before you even head to the store!

Oil prices: When you think of oil prices increasing, you may only think of oil influencing the cost of the gas you put in your car. In theory, this is correct; when oil prices go up, gas prices go up.  But consequently, increased gas prices raise the cost of shipping. With increased shipping costs, goods experience a jump in price as well.

Additionally, when we think about how our foods are produced, oil by-products are often used; especially in fertilizer to help grow grains. Again, in this instance, if oil prices go up, the price of the crop increases.

Regulations:  Whether through government or self-imposed regulations, many grocery stores are restricted when it comes to how far they can lower their prices.  Regulations are put in place to prevent businesses from trying to out-price each other. However, the same regulations can make prices skyrocket for consumers and force businesses to develop different pricing strategies in order to cover the costs of the imposed regulations and to operate in their given jurisdiction.  With set price ceilings and taxes, manufacturers and distributors can find their costs rising, which, unfortunately, in turn will be off-set by increasing the price of goods for the consumer.

Meat: It may sound strange but the supply and demand for meat affects the prices of other food. The demand for meat has increased over the years which, in turn, has required us to increase our overall supply. Livestock must be nourished with crops. Especially when you consider our organic and grass fed livestock, a large amount of the national crop supply goes towards feeding these animals.  If the demand for meat is high and we have more livestock, the demand for crops increases. As the crop supply is used towards livestock and becomes depleted, the prices of crops rise at your local supermarket.

Check out this great  short and informational video about how supply and demand directly affects how much you pay at the store.

The high cost of food can be frustrating especially when you have a large family to feed. Being aware of food prices and how outside factors influence them can help you stay more connected and on top of your budget.

To learn more about how you can save on what you need, check out our blog on cost saving apps.