Is gas price drop having ripple effect?

November 21, 2008 6:16:23 PM PST
Everyone's noticed the difference at the pumps. With oil prices making record drops, drivers are finally getting a break when they need it the most. And now, the savings are even making it back to grocery stores as well. [CHECK THE MARKETS: Get the latest numbers from Wall Street]
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One of the biggest reflections of the plummeting oil prices can be seen all across the country at gas stations. On Friday, the national average price fell below $2 a gallon for the first time in more than 3 years. Drivers in Houston are paying an average of $1.79 for regular gasoline. It's one bright spot in a sinking economy.

Despite the drop in prices, Americans are still driving less. Just this week, the Federal Highway Administration said drivers logged 10.7 billion fewer miles in September than they did the same month last year.

And gas prices tend to affect everything, including the price of groceries. But are we seeing the price difference yet?

Linda Mondragon saw her grocery bill go up and up when fuel prices soared earlier this year.

"I assumed that was because of the fuel charge that the suppliers had to incur, too," she said.

Now, with prices on their way down, she's hoping the same will hold true for the fruits and vegetables she buys.

"I 'm hoping they'll be less," said Linda. "Don't know yet. I'll see today. I'm hoping they will be."

Kroger stores say they have seen some declines in prices due to reductions in manufacturers' costs. Though some customers haven't noticed it yet.

"With the items that I buy, I haven't noticed a difference in the price very much," said shopper Rita Walker.

"With prices coming down at the power source, food prices ought to follow," added shopper Gene Naparst.

"I would assume that it costs less to get it here now, but it doesn't seem to make any difference," shopper Annette Mullins noticed.

H-E-B Houston President Scott McClelland says that's because there is a delay from the time energy prices drop at the pump until food prices fall on the shelves.

"The term that we're hearing is sticky prices, meaning the manufacturers who had a bad profit year in 2008 are going to try to hold to some incremental profit in 2009 and take it to their bottom line to help their stock price," said McClelland.

So even if you haven't seen the prices come down as much as you'd like just yet, expect it will happen soon, as long as oil doesn't spike back up again just as quickly as it fell.

Both Kroger and H-E-B tell us that one way you can save money and where the prices seem to drop a lot faster are in the store brand products because they can better control the price of those and negotiate them lower as the prices of gas goes down.

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