All of us know that food prices have been rising at an alarming rate but the government wants us to believe that there is little or no inflation. The riots around the world have been triggered by rising food prices. Unfortunately for us all the worst is yet to come.-Lou
Grocery Prices Skyrocket Faster than Official Inflation
Grocery prices increased at more than 50 percent the rate of inflation in 2010, according to data from the U.S. Bureau of Labor Statistics.
Food prices increased an average of 1.7 percent between November 2009 and November 2010, in comparison with a general inflation rate of only 1.1 percent. The greatest price increases were seen among meat, poultry, fish and eggs, which went up in cost by 5.8 percent. The price of sugar and sweets increased 1.2 percent, the price of fats and oils increased 3 percent and the price of dairy-basedproductsincreased 3.8 percent.
The only commodities to go up in price more thanfoodwere medical care and transportation.
“I noticed just this month that my grocery bill for the same old stuff — cereal, eggs, milk, orange juice, peanut butter, bread — spiked $25,” said Sue Perry, deputy editor of “ShopSmart” magazine. “It was a bit of sticker shock.”
The rises in price were caused in part by climate-related crop failures in several major food exporting countries. In addition, rising demand for corn from the biofuels industry has pushed uppricesfor animal feed, leading to higher meat,dairyand egg costs. Finally, risingfuelprices have increased food production and transportation costs as well.
Prices are only likely to keep rising. The Department of Agriculture has forecast a further 3 percent rise infood pricesin 2011, but openly admits that the estimate is conservative.
“The USDA always plays it safe,” said Wells Fargo agricultural economist Michael Swanson. Swanson predicted price increases of 4 percent, the highest since the 5.5 percent increases that led to riots worldwide in 2008.
Major food producers including Kraft and General Mills have already announced plans to increase the prices of their products. Just how much of that increase will be passed along to consumers is uncertain, as retailers may try to force prices lower to keep shopper volume high.
“Food is a high-frequency driver,” Swanson said. “So if stores like Walmart and Kmart want to get shoppers in the door, it’s to their benefit to keep prices low.”