Grocery prices vary greatly across North Dakota

Farm Forum

The price of a gallon of low-fat milk can vary across North Dakota by as much as $3.80, depending on when and where it is purchased.

For the past nine months, North Dakota State University Extension agents have been gathering prices for a bag of food items at businesses in large and small communities. The low price recorded for a gallon of low-fat milk was $3.09, while the highest price was $6.89.

The pricing project began in September 2012 with the intent of determining trends in food prices by areas of the state, and community and business size. The food items being used for the study are everyday products such as milk, eggs, bread, cereal, coffee and peanut butter.

“The NDSU Extension Service was interested in finding out if there are significant price differences among oil-impacted and nonoil-impacted areas of the state or by the size of the community or type of food business,” says Lori Scharmer, NDSU Extension family economics specialist. “As we watched the economy of the state change, we were curious if the economic activity was having an effect on the price of groceries consumers buy.”

Economist Siew Hoon Lim, an assistant professor in the Department of Agribusiness and Applied Economics at NDSU, evaluated the data gathered during the nine months.

According to the data, consumers in oil-impacted counties pay, on average, 3.3 percent higher prices for this grocery bag of food than nonoil-impacted counties.

“This percentage of price difference was determined after controlling for community size, store type and time period, and was statistically significant,” Lim says.

The size of the community played a role in the price of food items. Lim found that communities with populations of more than 10,000 typically would pay 5.7 percent less for the bag of food than communities with less than 10,000 residents.

Lim also found the package cost 21 percent less in national chain stores and 6.3 percent less in larger supermarkets than in smaller supermarkets and local grocery stores.

“Shoppers consider more than just prices when choosing where to purchase groceries,” Scharmer says. “Consumers living in rural areas and the small communities of North Dakota may consider convenience and loyalty to a business, plus travel cost and time, when deciding where to purchase food items.”

“We know the prices in our smaller grocery stores are a bit higher, but the convenience of having a grocery store in town far outweighs the increase in prices,” says Vickie Paige, a consumer in the small community of Mohall.

“As the state’s consumers adjust to the changing economy around them, Extension staff will continue to gather prices for this package of foods through the end of this year,” Scharmer says.