Grocery prices likely to stay high even if fuel costs ease

Even if there’s a possibility of gasoline prices falling, consumers shouldn’t expect immediate relief at the grocery store.

Diesel fuel the backbone of the trucking and freight rail industries remains elevated, averaging about $5.60 a gallon nationwide.

That matters because higher diesel costs drive up shipping rates. Transportation companies pass those costs along to retailers, and retailers, in turn, pass them on to consumers.

The result: Higher prices at the checkout line and for home deliveries.

Rising diesel prices are especially impacting perishable goods, including fruits, vegetables, meat, poultry and dairy. Recent Consumer Price Index and Producer Price Index reports show inflation in those categories continuing to climb.

Even though the conflict involving the U.S., Israel and Iran began months ago, analysts say the effects are only now showing up in grocery prices.

“When diesel prices spike as significantly as they have, it amplifies the impact on those types of items,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “It may take weeks or even months to see those prices come down.”

De Haan said there is often a lag between falling fuel costs and lower prices on store shelves.

“Grocery store prices and shipping costs take time to filter through the system,” he said.

Some regions are feeling the impact more than others.

In parts of California’s agricultural regions, diesel prices are approaching $8 a gallon. The state produces a significant share of the nation’s dairy, almonds, grapes, lettuce and other crops.

“Only a couple of areas are close to $8 a gallon, but the national average is within about 25 cents of a record,” De Haan said.

Seasonal demand is also playing a role. Diesel use typically rises in the Midwest and South as farmers move from planting to maintaining crops like corn, soybeans and wheat.

Closer to home, diesel prices are running slightly above the national average — about $5.84 a gallon in D.C., $5.81 in Maryland and $5.71 in Virginia. That’s more than $2 higher than a year ago in all three areas.

Even if oil prices begin to fall, De Haan said consumers will need to be patient.

“Give it time to filter down,” he said. “Even when diesel prices decline, it takes a while for retailers to adjust and pass those savings.”

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