Nothing beats a home-cooked Thanksgiving dinner except comparing it to what it costs to eat out. As we near the national Thanksgiving holiday, consumers are finding that retail food costs are up 3 percent higher than restaurant prices since 2007.
"Thanksgiving food prices are up about 6 percent compared to last year," Corinne Alexander, Purdue University agricultural economist said.
"What's interesting is the difference between grocery store prices compared to restaurant prices. Grocery store prices are increasing at a pace of 7.6 percent, compared to a pace of 4.5 percent for restaurants."
According to Alexander, food retailers are passing higher commodity and energy costs on to consumers. Supermarket prices are climbing quicker than restaurant prices because about half the cost of a restaurant meal is tied to labor and restaurant wages are flat.
Those families who insist on having the traditional Thanksgiving meal at home should find bargains on several holiday staples, including turkey.
"There's a plentiful supply of turkey," Alexander said. "Turkey production in the U.S. is up 6 percent from last year. The U.S. Department of Agriculture predicts that the wholesale price of whole turkey is going to be between 94 and 98 cents per pound. Whether or not that translates through to the retail price and what retail price consumers pay is going to depend on the individual retailer pricing decision."
The estimated wholesale price for turkey is between 3 and 7 cents per pound higher than in 2007, driven by higher export demand for U.S. turkey.
Still, "turkey is a favorite loss leader item for grocery stores, where they'll offer you a coupon or a discount to give you a really great price on turkey," Alexander said.
"The reason is that grocery stores are hoping that when you come to pick up that turkey you're also going to buy your potatoes, your cranberries and all of the other items that you serve at Thanksgiving."
Most side items should be moderately priced this Thanksgiving, Alexander said.
Because cranberry supplies are up 5 percent from last year and because this is the second largest crop ever cranberry prices should be good this year. On the other hand white potato prices are up 35 percent this fall. In contrast, sweet potato prices have come down because there is a record sweet potato crop in North Carolina.
Those serving ham may have to pay up to 4 percent more than one year ago, although that price increase is below the general 6 percent food inflation rate, says Alexander.
Health conscious consumers trying to increase the fruits and vegetables in their diets are in for bad news. Alexander says there had been a reduction in the acreage of fruits and vegetables this fall and that is resulting in higher prices for both fresh and processed fruits and vegetables.
There is some good news. Preparing the feast will be more expensive, but consumers will spend less transporting it to grandma's house. Natural gas costs are 18 percent higher and electricity up 7 percent from fall 2007. Conversely, gasoline prices have fallen 20 percent in the past month.
U.S. consumers can be thankful they have plenty of food and that they spend little, in comparison to some parts of the world, for that food, Alexander said.
"Although Americans eat very well, we spend only 9.8 percent of our average income on food," she said.