Competition keeping
inflation at bay in
isle groceries

A supermarket survey shows
prices have been flat for the
last two years

By Russ Lynch
Star-Bulletin

Honolulu grocery prices have risen only slightly since April, less than half a percent, and have been essentially flat for the past two years, according to a new survey by First Hawaiian Bank.

The reason: Competition.

"I think that inflation in Hawaii is almost nonexistent," said the bank's chief economist, Leroy Laney.

The price of a 32-item market basket -- a measure of the groceries that an average family might consume in a week -- was up 0.4 percent from April, according to the bank's Supermarket Prices Index done for the Star-Bulletin in the first weekend in December.

In fact the semi-annual basket list comes out dead flat in price compared with October 1995, when the bank started the survey.

Grocery stores agreed with Laney that competition is the key and said they are always looking at ways to save costs in their operations and pass them on to consumers.

David Higashiyama, a spokesman for Times Super Market Ltd., said island shoppers have always closely compared prices.

"The economic environment is so competitive that it maintains pretty much a similar level of prices, except for commodities like produce." Vegetables and fruits are affected by climate shifts and many other factors that can radically change prices at the source, grocers say.

That shows in First Hawaiian's latest survey.

One item, iceberg lettuce, rose more than 24 percent in price from April to October, because of weather-related crop failures in California.

Meanwhile, there was a big price drop in frying chicken, down 25.7 percent. Rice was down 20.1 percent, while ground beef was up 12.8 percent.

Debra Lambert, a regional spokeswoman for Safeway Inc., said competition can be seen throughout the marketplace in Hawaii. "We do watch our competitors. We do that in every market, not just Hawaii."

"We've been very price competitive," she said. One way the company is doing that is through its customer-member card with special bargains for card-holders. The card is available to anyone who shops in a Safeway store.

That's true also at Foodland, said Shirley Kuma, a spokeswoman for Foodland Super Market Ltd. "We want to continue offering our customers a good value and we want to pass along whatever savings we can to our Maikai card holders," she said.

Higashiyama of Times' Super Market said he sees a new force working to push shoppers to do more comparisons -- the Internet.

More and more people are learning to "surf" for what they want to buy and compare prices. When they go shopping in their local stores, he said, that approach stays with them.

"It's the idea that there's always something better if you go looking for it," Higashiyama said.

Internet or not, shoppers today are "much better educated and aware of their opportunities compared to 10 or 20 years ago," he said.

In the Supermarket Prices Index, First Hawaiian takes what it figures would be a typical family's consumption and checks prices at 10 local supermarkets.

The banks adjusts the prices of nine items to fit presumed actual usage. For example, the bank checks the price of a pound of ground beef. But since most families are likely to eat more than one pound of ground beef in a week, the bank weighs the price by multiplying it by two. Likewise, since it likely takes more than a week to polish off a 5-pound bag of sugar, the index multiplies that item's price by .25 to lessen its impact on the survey.

Adjusted that way, the 32 items came to $78.35 this month compared with $78.02 in April and $78.32 in October 1995, the base of the study.

The bank says that the survey is not as scientific as the federal Consumer Price Index, which is done semi-annually for Honolulu. However the bank's survey has mirrored what the CPI has found in the past two years -- inflation in Honolulu remains in check.