When cities are grouped by their prices in August 1966 a rather clear overall pattern emerges (table 2). The 10 cities with the lowest retail prices in August 1965 experienced average price increases of 15.3 percent, or 2.7 cents per pound. At the other extreme, the nine cities with the highest prices in August 1965 experienced an average increase of only 4.2 percent, or 1.1 cents per pound. TABLE 2.-Changes in retail bread prices, August 1965-August 1966 Source: Based on data supplied the Federal Trade Commission by the Bureau of Labor Statistics. RECENT INCREASES IN INGREDIENT COSTS Flour and other ingredients account for roughly one-third of the bakers' total costs of manufacturing and distributing white bread. In addition to flour, the basic ingredients are sugar, nonfat dry milk, lard, and yeast. Table 3 charts the price movements of these products since 1961. Each ingredient is expressed in terms of its cost to bakers per 1-pound loaf of white bread.2 TABLE 3.-Cost of ingredients per pound loaf of white bread, 1961–66 Source: Computed from prices shown in appendix table 6. Overall ingredient costs followed a rather steady course during 1961-65, averaging 5.6 cents per loaf. The cost of individual ingredients also followed a rather even course. After remaining virtually unchanged in the first months of 1966, flour prices began rising in May, and by July were 0.7 cent above the 2 Appendix table 6 shows the actual prices of the ingredients. |