Memorandum to Correspondents: Interim Report on Baked Goods and Cereals

by Michael H. Moscow on January 13, 1976
by Michael H. Moscow

In April 1975 the Council on Wage and Price Stability initiated a study of the breakfast cereals and bakery products industries in order to determine if competitive forces were operating with sufficient vigor to translate reductions in basic commodities prices — wheat, corn, and sugar in particular — into reduced prices for bread, cookies, crackers, cakes, rolls, and breakfast cereals. After a preliminary investigation which yielded conflicting but potentially troublesome findings, we have decided to deepen our inquiry and request further data on costs, profit margins, and the cost of capital equipment in at least two of the markets studied — bread baking and breakfast cereals -where the combination of rising profit margins and considerable economic concentration raise doubts as to whether commodity cost savings are being reflected in the retail prices charged to consumers …

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