Prices for pork and beef pushed a gauge of wholesale food prices higher at a rate faster than on-the-shelf costs in November, marking six straight months of potential compression for grocers' margins.
The "food at home" index of the consumer price index, or CPI, rose 1% in November, according to the U.S. Bureau of Labor Statistics. The subindex represents prices paid by consumers at retailers such as The Kroger Co. and Target Corp.
But the "final demand food" index of the producer price index, or PPI, rose at a faster clip of 3.2%. The subindex represents the prices that grocers and other retailers pay to stock their shelves.
Analysts use the difference between the two metrics to determine the state of grocers' profit margins, subtracting the growth rate of the PPI subindex from the growth rate of the CPI index. When the result is negative, grocers' margins are more likely to narrow.
In November, the difference was negative by 2.2 percentage points, according to an analysis by S&P Global Market Intelligence.
Rising prices for pork, oilseeds as well as beef and veal pushed the PPI higher, while prices for shortening and cooking oils as well as processed fruits and vegetables each posted modest declines.
Consumer prices for dairy and related products rose 2.6% during the month, while nonalcoholic beverages and beverage materials advanced 1.7%, cereals and bakery products moved higher by 1.1%, and the category for meats, poultry, fish and eggs notched a 1% gain. Prices for fruits and vegetables as well as other food at home products were each 0.4% higher.
Changes to retailers' grocery delivery operations during the month included Walmart Inc.'s reported the shuttering of Jet.com's fresh grocery delivery business after only about a year of operation.
The retailer also said Dec. 10 that it would partner with Nuro Inc. to provide grocery delivery via autonomous vehicles in Houston. Nuro has a similar partnership with Kroger.
The highest-value deal in the food industry during the month to Dec. 12 was Nestlé SA's announced plan to sell its U.S. ice cream business to its joint venture with private equity firm PAI Partners for $4 billion. The joint venture, which already managed Nestlé's ice cream businesses in countries ranging from Brazil to Israel, could provide Nestlé an avenue to exit the global ice cream business. That business has struggled to make gains against a rival unit at Unilever PLC, GlobalData food correspondent Simon Harvey wrote in a Dec. 12 note.
"After all, market watchers have questioned the viability of Nestlé remaining in the volatile frozen-food category as a whole for some time," Harvey wrote.
U.S. tuna processor Bumble Bee Foods LLC said Nov. 21 that it would sell assets to Taiwanese company F.C.F. Fishery Co. Ltd. for $925.6 million. Bumble Bee filed for Chapter 11 bankruptcy protection the same day it announced the transaction.
Other food companies acquired brands during the month. PepsiCo Inc.'s Frito-Lay North America Inc. said Dec. 2 that it would pay an undisclosed amount for BFY Brands LLC, which makes vegetable-based chips, acquiring the company from Permira Advisers Ltd., a UK-based private equity firm. The same day, Twinkie maker Hostess Brands Inc. said it agreed to acquire sugar-free-cookie maker Voortman Cookies Ltd. from San Francisco-based private equity firm Swander Pace Capital for $319.77 million.
Grocery supplier United Natural Foods Inc. continued sales of physical stores that it acquired in its deal for SuperValu Inc., announcing a deal to sell 13 supermarkets under the Shoppers banner to three undisclosed buyers. The value of the transaction was not disclosed.