Dropping prices bring smiles at supermarkets, take inflation bite from food budgets -- for now

A meat "glut" is bringing welcome price relief and even smiles at grocery stores across the country. The largely unanticipated increase in meat supplies -- especially beef and pork --together with a leveling off in the price of sugar and major components of p repackaged food has resulted in overall grocery bills dropping slightly last month. An Associated Press survey of grocery bills in 14 cities last month showed an average 1.5 percent drop. Surveys by consumer groups show similar trends.

"It's hard to believe," says Diane Dolan, chief spokesman for the National Association of Retail Grocers of the United States, "but food this year has been a moderating factor on inflation. What we were anticipating for this year was that food would at least keep up with inflation."

Although the respite from upward spiraling food prices may be short-lived, many economists are revising their 1981 food price rise forecasts downward to take into consideration the expected superabundance of meat.

How long will the good news last? According to a recent report published by the Washington Analysis Corporation, a private and widely respected inflation forecasting firm, "food prices will continue to decelerate in the first quarter of 1981" and then rise sharply in the second and third quarters.

The average food price increase for 1981 may be well below the 12.2 percent rate forecast for 1981 by the US Department of Agriculture late last year, economists say.

The American Meat Institute (AMI), which represents beef and pork meat packers and processors, recently revised downward its forecast for meat price increases because "the inventory hadn't dropped as much as people originally thought," says Dr. Ewen Wilson, an economist with the AMI. "In actual number, we have 64.5 million hogs out there. A year ago there were 67.4 [million] --and although this number is down, it's not down as much as anticipated . . .. The more meat, the lower the price. Also, we have more cattle around today than a year ago -- around 3 percent [more]."

Overall, economist Wilson says, this extra meat will help reduce food price inflation -- at least this year while supplies are excellent.

This doesn't mean, however, that the price rise of all food items is slowing. Citrus prices, for example, will be high because of the two-day freeze in Florida in January.

J. William Swan, president of the National Cattlemen's Association (NCA) headquartered in Denver, notes that beef prices have continued to "lag behind the general rate of inflation for an extended period" --added that if beef supplies decrease as expected in late spring, prices may rise again.

But Roger Berglund, another spokesman for the NCA, says that since supplies should continue generally abundant this year, "the overall price increase for beef will be well below what USDA forecast" -- perha ps no more than 10 percent.