Retail prices for food at the supermarket dropped about 4% in the fourth quarter of 2004, offsetting most of the increase recorded in the third quarter, according to an American Farm Bureau Federation survey.

The informal survey on the total cost of 16 basic grocery items showed a decrease of $1.51 from the 2004 third quarter survey. The third quarter average price for the items was $1.53 higher than the second quarter.

The $38.87 average paid by shoppers for the 16 items in the fourth quarter was $1.44 higher than the 2003 fourth quarter survey average of $37.43. The AFBF said that despite the increase Americans spend just 10% of their disposable income on food annually, the lowest average of any country in the world.