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Correspondence Letter

 November 9, 2005

 VIA FACSIMILE AND EDGAR

 Michael Moran, Branch Chief

 Donna Di Silvio

 United States Securities and Exchange Commission

 Division of Corporation Finance

 Mail Stop 3561

 450 Fifth Street, N.W.

 Washington, D.C. 20549

Re:

Safeway Inc.

 Form 10-K for the Fiscal Year End January 1, 2005

 Forms 10-Q for the Quarterly Periods Ended March 26, 2005 and

 June 18, 2005

 File No. 1-00041

 Dear
Ms. Di Silvio and Mr. Moran:

 We are responding to the Staff’s
comment letter to Safeway Inc. (the “Company”) received by facsimile on October 13, 2005.

 The Staff’s comments are set forth below in italics, followed by our response to the comment.

 Form 10-K for the Fiscal Year Ended January 1, 2005

 Financial Review, page 20

1.
Please include a discussion of your employee benefit plans comparing actual and expected results. In this regard, please address the material trends and amounts reflected in the
financial statements and the variations between the actual results and the results expected based on your significant assumptions such as the actual and expected long-term rates of return on plan assets. Also, please discuss your funding obligations
including the amounts, timing and effect on future cash flows of the registrant. Please show us what your disclosure will look like in future filings revised.

 We will provide the following disclosure in Management’s Discussion and Analysis in future filings:

 The determination of Safeway’s obligation and expense for pension
benefits is dependent, in part, on the Company’s selection of certain assumptions used by its actuaries in calculating these amounts. These assumptions are disclosed in Note I to the consolidated financial statements and include, among other
things, the discount rate, the expected long-term rate of return on plan assets and the rate of compensation increases. Actual results in any given year will often differ from actuarial assumptions because of economic and other factors. In
accordance with generally accepted accounting principles (“GAAP”), actual results that differ from the actuarial assumptions are accumulated and amortized over future periods and, therefore, affect recognized expense and recorded
obligation in such future periods. While Safeway believes its assumptions are appropriate, significant differences in actual results or significant changes in the Company’s assumptions may materially affect Safeway’s pension and other
post-retirement obligations and its future expense.

 Safeway bases the discount
rate on current investment yields on high quality fixed-income investments. The discount rate used to determine 2005 pension expense is 6%. A lower discount rate increases the present value of benefit obligations and increases pension expense.
Expected return on pension plan assets

 is based on historical experience of the Company’s portfolio and the review of projected returns by asset class on
broad, publicly traded equity and fixed-income indices, as well as target asset allocation. Safeway’s target asset allocation mix is designed to meet the Company’s long-term pension requirements. For 2004, the Company assumed rate of
return was 8.5% on U.S. pension assets and 7.0% on Canadian pension assets. Over the ten-year period ended January 1, 2005, the average rate of return was approximately 12% for U.S. pension assets and 10% for Canadian pension assets.

 Sensitivity to changes in the major
assumptions for Safeway’s pension plans are as follows (dollars in millions):

United States

Canada

Percentage
Point
Change

 Projected
Benefit
Obligation
Decrease

 (Increase)

 Expense
Decrease

 (Increase)

 Projected
Benefit
Obligation
Decrease

 (Increase)

 Expense
Decrease

 (Increase)

 Expected return on assets

+/-1.0 pt

—

$
16.0/
(16.0)

—

$
2.0/
(2.0)

 Discount rate

+/-1.0 pt

$
180.5/
(224.3)

$
37.7/
(28.0)

$
39.5/
(45.5)

$
4.3/
(4.6)

 Cash contributions to the
Company’s pension plans are expected to total $17.7 million in 2005 and totaled $19.0 million in 2004, $16.0 million in 2003 and $35.6 million in 2002. Safeway expects to fund future contributions to the Company’s pension plans with cash
flow from operations.

 Results of
Operations, page 20

2.
Please provide transparent disclosure of the other charges reflected in your financial statements. We note an adjustment was made to conform the Company’s lease accounting
policies to views expressed by the Office of the Chief Accountant of the SEC. Tell us if the lease expense adjustment related to rent holidays was a correction of an error and clearly state this fact or otherwise clarify the nature and basis for the
adjustment in future filings.

 We will provide the requested
disclosure in Management’s Discussion and Analysis in future filings. The following would be the current disclosure that describes the requested information concerning lease accounting adjustments that would be included in Management’s
Discussion and Analysis:

 On February 7, 2005, the Office of the Chief
Accountant of the Securities and Exchange Commission issued a letter to the American Institute of Certified Public Accountants expressing its view regarding certain lease related accounting issues and their application under GAAP. In light of this
letter, Safeway determined that its then-current method of accounting for rent holidays was not in accordance with GAAP. Historically, the Company recognized rent expense on a straight-line basis beginning at the first rent payment. The Company now
recognizes rent expense on a straight-line basis when it takes possession and control of the property. Safeway recorded a $10.6 million before tax charge in 2004 to correct this error. However, most of the adjustment was accumulated over many years.

3.
Please tell us and revise future filings to state the specific nature of your change in accounting policy for accruing estimated physical inventory losses. Disclose how inventory
losses were previously accounted for and determined. Further, please expand your accounting policy in the notes to your financial statements. Expand your policy to clarify whether or not the adjustment is made at the balance sheet date or if
estimated inventory shrink adjustments are made to an allowance throughout the year based on actual physical inventories to provide for estimated shortages as of the balance sheet date. Disclose the frequency of the physical inventories. Show us
what your disclosure will look like revised.

 2

 We will provide the requested disclosure in Management’s Discussion and Analysis in future filings. The following
would be the current disclosure that describes the requested information concerning our physical inventory policy that would be included in Management’s Discussion and Analysis:

 In 2003, Safeway changed its accounting policy to accrue estimated physical inventory losses that occur between the last physical inventory
count and the quarterly or year-end balance sheet date. Previously, Safeway recorded inventory losses only in the period the physical count was performed.

 Safeway takes a physical count of perishable inventory in stores every four weeks and nonperishable inventory in stores twice a year on a cycle basis. Distribution
centers are counted twice a year on a cycle basis. In order to reflect inventory more accurately on the balance sheet, Safeway decided to accrue an estimated physical inventory loss for the period between the last physical inventory count and the
quarterly or year-end balance sheet date. Additionally, Safeway changed its physical inventory loss calculation methodology to reflect more precise data from new financial software installed in 2003. This charge reduced earnings by $71.0 million
before tax ($0.10 per diluted share) in 2003. However, most of the adjustment accumulated over many prior years.

 We will revise our accounting policy in the notes to financial statements as follows in future filings:

 The Company takes a physical count of perishable inventory in stores every four weeks and
nonperishable inventory in stores and all distribution centers twice a year. The Company records an inventory shrink adjustment upon physical counts and also provides for estimated inventory shrink adjustments for the period between the last
physical inventory and each balance sheet date.

 Liquidity and Financial Resources, page 25

4.
Please expand your contractual obligations table in future filings to include estimated interest payments or provide a footnote to the table clearly identifying the excluded
amounts such that your cash requirements are transparent.

 In future filings, the Company’s contractual obligations table will include interest payments as presented below:

 The table below presents significant contractual obligations of the Company at year-end 2004 (in millions):

2005

2006

2007

2008

2009

Thereafter

Total

 Long-term debt(1)

$
596.9

$
818.7

$
785.2

$
553.7

$
502.2

$
2,809.9

$
6,066.6

 Estimated interest on long-term debt (2)

346.9

307.0

282.6

239.4

210.7

1,423.4

2,810.0

 Capital lease obligations(1)

42.8

40.8

41.8

42.5

43.7

485.2

696.8

 Interest on capital leases

68.8

64.7

60.6

56.5

52.3

416.9

719.8

 Self-insurance liability

142.9

96.2

66.1

46.7

34.5

112.5

498.9

 Interest on self-insurance liability

2.2

4.7

5.5

5.5

5.3

41.9

65.1

 Operating leases

405.9

396.8

380.9

362.5

328.3

2,778.6

4,653.0

 Contracts for purchase of property, equipment and construction of buildings

139.7

—

—

—

—

—

139.7

 Contracts for purchase of inventory

486.9

—

—

—

—

—

486.9

(1)
Required principal payments only.

(2)
Excludes payments received or made relating to interest rate swaps as discussed on page 17.

 3

5.
Please provide a separately captioned section discussing your off-balance sheet arrangements as required by Item 303 of Regulation S-K. If you have no such arrangements,
please state that fact. Please show us what your disclosure will look like revised.

 In future filings, we will provide a separately captioned section discussing the Company’s off-balance sheet arrangements. The following would be the current disclosure that describes the Company’s
off-balance sheet arrangements:

 Off-Balance
Sheet Arrangements:

 Guarantees - The Company is party to a variety of
contractual agreements under which it may be obligated to indemnify the other party for certain matters. These contracts primarily relate to the Company’s commercial contracts, operating leases and other real estate contracts, trademarks,
intellectual property, financial agreements and various other agreements. Under these agreements, the Company may provide certain routine indemnifications relating to representations and warranties (for example ownership of assets, environmental or
tax indemnifications) or personal injury matters. The terms of these indemnifications range in duration and may not be explicitly defined. Historically, Safeway has not made significant payments for these indemnifications. The Company believes that
if it were to incur a loss in any of these matters, the loss would not have a material effect on the Company’s financial statements.

 Letters of credit - The Company had letters of credit of $79.0 million outstanding at year-end 2004. The letters of credit are maintained primarily to support
performance, payment, deposit or surety obligations of the Company. The Company pays commissions ranging from 0.15% to 1.00% on the face amount of the letters of credit.

 Interest rate swap agreements - The Company has, from time to time, entered into interest rate swap agreements to change its portfolio mix
of fixed and floating-rate debt to more desirable levels. Interest rate swap agreements involve the exchange with a counterparty of fixed and floating-rate interest payments periodically over the life of the agreements without exchange of the
underlying notional principal amounts. The differential to be paid or received is recognized over the life of the agreements as an adjustment to interest expense. The Company’s counterparties have been major financial institutions. The Company
effectively converted $500 million of its 4.95% fixed-rate debt and $300 million of its 4.125% fixed-rate debt to floating rate debt through interest swap agreements.

 4

 Financial Statements

 Note M: Segments, page 50

6.
Please tell us what consideration you gave to providing revenue disclosures by product group such as pharmacy, grocery, floral, health and beauty or other categories as deemed
appropriate. See paragraph 37 of SFAS 131.

 We considered
paragraph 37 of SFAS 131. We also looked to the aggregation criteria in paragraph 17 of SFAS 131 in order to determine whether groups of products or services are similar. For example, if a group of products have similar economic
characteristics, production processes, and class of customer they may be considered similar for purposes of disclosure under paragraph 37 of SFAS 131.

 We view all our product groups as similar because they have similar economic characteristics, procurement processes and are sold to the same group of customers. Changes
in gross margins in any particular product group are frequently part of a strategy designed to drive sales in other product groups and are not necessarily indicative of long-term profit potential for that particular product group.

 In addition, product group distinctions are often arbitrary and change frequently. Many
products are included in different product groups at the same time. For example, sandwich meat, cheese and other related products are each included in our Deli, Grocery and Meat departments. Some over the counter drugs, health and beauty items are
included in both our Pharmacy and our General Merchandise / Health and Beauty departments.

 After reconsideration of paragraph 37 of SFAS 131, we continue to believe that revenue disclosures by product group are not appropriate.

 *******

 The Company acknowledges that:

•

The Company is responsible for the adequacy and accuracy of the disclosure in the filing;

•

Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and

•

The Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

 We hope the foregoing answers are responsive to your comments.
Please do not hesitate to contact me by telephone at (925) 467-3142 with any questions or comments regarding this correspondence.

 Very truly yours,

 /s/ David F. Bond

 David F. Bond

 Senior Vice President, Finance and Control

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