Higher Grain Prices Start Pinching Consumers; USDA Expects Food Prices to Jump – WSJ.com

Agricultural , Commodities , Food Feb 25, 2011 No Comments

The surge in grain prices that has been stoking food inflation for months in much of the world is beginning to seep into U.S. supermarkets and restaurants.

U.S. food prices will jump between 3% and 4% this year, the U.S. Agriculture Department forecast Thursday, after rising in 2010 by the slowest rate since 1962.

The cost of processing food is soaring in part because foreign demand for U.S. agricultural commodities is surging at the same time the rising price of gasoline is stimulating the biofuel industry's appetite for corn to make ethanol.

Prices of corn, wheat and soybeans—crops that are ubiquitous in U.S. food products—are up 88%, 76% and 37%, respectively, from 12 months ago. The soaring cost of fattening livestock with grain is also helping to lift prices of hogs and cattle to record-high levels. On top of all that, rising oil prices are lifting costs of packaging and transportation.

The USDA raised its 2011 food-inflation forecast Thursday from the 2% to 3% range it had been projecting since July. The government's consumer-price index for all food rose 0.8% in 2010. A change of one percentage point in the food-inflation rate is equal to about $12 billion in annual spending.

via Higher Grain Prices Start Pinching Consumers; USDA Expects Food Prices to Jump – WSJ.com.

Rod Sherkin

Rod is a former senior executive, responsible for Purchasing, for both Pillsbury and Ball Packaging back in the 80’s and 90’s. Since then, he has continued to work in the Purchasing field as both a consultant and founder of the website Propurchaser.com.