The consumer staples sector closed on Friday May 2, 2008 at $171.03.

The high over the last year was $211.22 on July 18, 2007 and the low was $156.77 on March 17, 2008. From the peak to the trough that represents a drop of - 24.5% for the consumer staples sector vs. the TSX, which dropped – 11.2% and the S&P 500, which dropped –17.4%. Since March 17th the TSX and S&P 500 are both up over 10% while the consumer staples sector is up 7.2%. Although this sector has lagged the broader market don’t lose hope, especially during a slowdown.

The chart suggests that we could be seeing a more positive trend. The current price crossed the 50-day moving average on April 30, which is one positive signal. Since March we have seen the start of an upward channel forming and if the current price can break through the next point of resistance of $173, which is not far off, maybe the worst is behind us in this sector.

Some of the Canadian companies you may recognize in this sector are Loblaw Companies Limited, Maple Leaf Foods Inc., Rothmans Inc., Saputo Inc., and Shoppers Drug Mart Corporation. Typically during an economic slowdown or recession companies like this hold up well because everyone needs food and drugs.

The other day I went to buy frozen blueberries and the price of a bag was over $17 vs. $13, about a month ago. Wow, that’s a 40% increase! So what did I do? Bought frozen strawberries for about $8. Is this a sign of things to come? The only question in my mind is how will rising food prices factor into profits for grocery stores?