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Thanksgiving dinner just got more expensive

Looking at overall food price inflation, consumers are probably going to be paying about 5 percent to 6 percent more for Thanksgiving dinner than last year, which is an above-average increase in food costs.

Americans talking turkey this Thanksgiving might say some not-so-grateful words about the price.

Although there should be adequate supplies of the holiday gobbler, wholesale prices per pound are expected to range between $1.07 and $1.11 - up 3-7 cents a pound from last year, said Purdue University agricultural economist Corinne Alexander. The higher price reflects a general increase in food prices this year, she said.

"Looking at overall food price inflation, consumers are probably going to be paying about 5-6 percent more for Thanksgiving dinner than last year, which is an above-average increase in food costs," Alexander said. "We consider normal food price inflation at somewhere around 2.5 percent."

The actual price consumers pay for turkey this Thanksgiving will depend on the choices they make: whole bird vs. turkey parts, frozen vs. fresh, conventionally vs. organically raised, brand name vs. off-brand products and the story where they buy the turkey, Alexander said.

Supermarkets often price turkey as a loss leader in order to attract customers to their stores to buy everything else they need for the Thanksgiving meal, she said. Retail turkey prices usually fall from August to December as a result of increasing supplies and special pricing.

Other Thanksgiving staples are a mixed bag of higher and lower prices. Sweet potatoes are abundant, with projected prices 6 percent lower than last Thanksgiving. White potatoes, on the other hand, are being harvested now, and prices are 20 percent higher than one year ago, Alexander said.

"If the weather cooperates and the growers in the West are able to harvest the white potatoes, we may see those prices come down between now and Thanksgiving," she said.

The nation's cranberry crop is expected to be 10 percent bigger this year - the second largest production on record. Prices are likely to remain about what they were in 2010 because of strong market demand, Alexander said.

Although Halloween pumpkins cost more this fall because of crop problems, there are ample supplies of canned pumpkin for pie, and prices should be stable, she said.

Why the increase?

Food prices are rising for several reasons, Alexander said.

"The main reason for higher prices this year is the increase in commodity prices, as the global economy picks up," she said. "Weather events such as flooding in the Midwest and drought in the southern Plains also played a role."

Grain prices began surging in 2010 when drought devastated the Russian wheat crop and continued to rise on the heels of a smaller-than-expected U.S. corn crop, Alexander said.

"Because of these substantially higher commodity grain prices and the drought in the southern Plains, livestock and dairy producers have delayed expansion or even continued reducing their herds," she said. "As a result, consumers have seen higher prices for meat and dairy products in 2011. These higher prices will continue into 2012."

In addition to a more costly feast, consumers will spend more traveling to enjoy Thanksgiving with family or friends. Gas prices are about 33 percent higher than this time last year, Alexander said.

While the average American spends about 10 percent of their income on food, this Thanksgiving could be tougher for many who have lost their jobs or are underemployed.

"Consumers right now are struggling," Alexander said. "They're facing tight budgets where there's been little, if any, wage growth. If anything, they've seen their wages decrease, either through fewer work hours or pay cuts, or they may be on a fixed income and haven't gotten cost-of-living increases that match where inflation is today.

"Retailers are fully aware of this, and they are doing everything they can to not increase food prices. But at some point they have to make at least enough money to stay in business, so they have to pass on these higher ingredient costs to consumers. Everybody is between a rock and a hard place."

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