Across 114 categories representing more than 99 percent of all department sales Nielsen monitors, six categories had price increases of greater than 15 percent over a year ago.  38 categories had price increases of 0 percent to 4.9 percent, while 11 had price declines. The top five categories with the largest price increases over the course of the year:

• Dry vegetables & grains 25%
• Flour 23%
• Jams, jellies & spreads (including peanut butter) 19%
• Car accessories 19%
• Pet food 16%

Higher commodity prices played a role in all of the food categories, while higher crude oil prices drove increases for motor oil in the car accessory categories.  Meanwhile, the following categories decreased in price:

• Fresh eggs -12%
• Milk -8%
• Candles & Incense -5%
• Light bulbs and telephone accessories -3%
• Non-carbonated soft drinks -3%

In the four week period ended January 24, 2009, unit prices across the store were up 5.5 percent – exactly the same as the 2008 Consumer Price Index calculated by the U.S. government.

“U.S. consumers would certainly benefit from lower prices.  But retailers should be careful with how far they push their manufacturer partners to lower prices. If they simply push for lower prices without planning for the right lower prices, they may find it extremely difficult to grow same-store sales this year,” said Todd Hale, Senior Vice President, Consumer & Shopper Insights at Nielsen.

Read the entire article about pricing trends in the lastest edition of Facts, Figures & the Future here.

So are consumer packaged goods (CPG) manufacturers and retailers, who have struggled in recent months to balance consumer demand for low prices and high value with abnormally high raw materials and transportation costs.

Rather than raising prices, some food manufacturers have reduced the size of their products.  Such strategies may minimize sticker shock at the grocery store, but are unpopular with U.S. consumers.

Instead, according to Nielsen, nearly half (47%) of American consumers would prefer to buy large, economy-sized products with lower price points per serving.

In comparison, only 17% of consumers surveyed by Nielsen said they would prefer CPG manufacturers to introduce new, smaller pack sizes at lower prices.  Another 9% suggested that CPG manufacturers downsize or modestly reduce the packaging size of products, keeping the price of the product the same. 

“CPG manufacturers and retailers have few options to manage rising commodity costs beyond absorbing increased costs, passing on increases to consumers by raising prices, or covering increased costs by downsizing offerings,” Todd Hale, senior vice president, Consumer & Shopper Insights, Nielsen, noted.  “Downsizing, in particular, is not a new option — we’ve seen downsizing over the last few years in a number of categories, including ice cream, cereal, candy bars, salty snacks, and paper products.”

View the media alert.

U.S. consumers are expected to purchase more than 110 million pounds or $215 million worth of hot dogs and 25 million pounds or $117 million of fresh ground beef for the July 4 holiday, according to Nielsen.  Meanwhile, carbonated beverage sales are expected to reach a whopping $1.5 billion – or more than 240 million cases, while at least 23 million cases of beer are expected to be sold in supermarkets alone.

But cost-conscious cooks may wish to forego the bun.  Baked goods have experienced the greatest price increases of all cook-out fare, and Nielsen’s analysis predicted that consumers will spend 19.5% more for fresh bakery buns this year vs. last year.  Prices for other cook-out mainstays, like potato chips and processed American cheese slides, are also significantly higher this year.

View the full Nielsen Release.