New Grocers Help Keep Lid on Prices, Study Says

A new wave of competition among food vendors is holding down prices and saving the typical U.S. family about $500 annually, an Agriculture Department economist said.

Ephraim Leibtag, USDA’s food-price expert, forecast food inflation of 2% to 3% this year, about the same as last year and a relief after the 3.4% rise in prices during 2004.

Over the last few years, old-line grocery chains have faced fast-growing competition from nontraditional retailers that now hold nearly 40% of the grocery market. Leibtag said a survey of prices suggested the new competitors often undercut grocers’ prices.