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The Impact of Nontraditional Retailers on Retail Dairy Prices and the Dairy CPI

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  • Leibtag, Ephraim S.

Abstract

Over the past 10 years, the growth of nontraditional retail food outlets has been of the biggest changes in the retail food market landscape. Nontraditional retailers have helped to increase the variety of shopping and food options available to consumers, and also have increased the amount of price variation in retail food markets. The current CPI for food does not fully take into account the lower price option that a nontraditional retailer offers when it enters and expands in a given geographic market. A significant difference exists between price change as measured using scanner data and the CPI estimate of price change, even for the relatively low food inflation period of 1998-2003 covered in this report. The results of this study estimate that the BLS CPI for dairy products overstates food price change by 1 to 3 percentage points per year for the dairy, eggs, and butter and margarine CPI categories.

Suggested Citation

  • Leibtag, Ephraim S., 2006. "The Impact of Nontraditional Retailers on Retail Dairy Prices and the Dairy CPI," 2006 Annual meeting, July 23-26, Long Beach, CA 21294, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea06:21294
    DOI: 10.22004/ag.econ.21294
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    References listed on IDEAS

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    1. Leibtag, Ephraim S. & Kaufman, Phillip R., 2003. "Exploring Food Purchase Behavior of Low-Income Households: How Do They Economize?," Agricultural Information Bulletins 33711, United States Department of Agriculture, Economic Research Service.
    2. Jerry Hausman & Ephraim Leibtag, 2007. "Consumer benefits from increased competition in shopping outlets: Measuring the effect of Wal-Mart," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(7), pages 1157-1177.
    3. Jerry Hausman & Ephraim Leibtag, 2009. "CPI Bias from Supercenters: Does the BLS Know that Wal-Mart Exists?," NBER Chapters, in: Price Index Concepts and Measurement, pages 203-231, National Bureau of Economic Research, Inc.
    4. Kaufman, Phillip R. & MacDonald, James M. & Lutz, Steve M. & Smallwood, David M., 1997. "Do the Poor Pay More for Food? Item Selection and Price Differences Affect Low-Income Household Food Costs," Agricultural Economic Reports 34065, United States Department of Agriculture, Economic Research Service.
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