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By Mark Huffman
ConsumerAffairs.com
June 8, 2007
First, consumers took a hit in the wallet at the gas pump. Could a jump in food prices be next?
Increasing demand for grain, for use in biofuels, has created feed shortages in some areas, with farmers having to pay more to keep livestock fed. Unfavorable weather conditions in the U.S. and other grain producing countries this spring could further tighten supplies, analysts warn.
Just this week cereal giant General Mills announced it would raise the price of many of its cereals, citing higher ingredient costs as the reason. The price of a box of cereal will actually go down, but the boxes will be smaller and contain less cereal.
Food prices are already trending higher this year, and are estimated to rise as much as seven percent in 2007, according to an analysis of government inflation figures. In 2006, food prices rose just 1.8 percent.
In fact, lots of food items cost more this year than last year.
The price of eggs is up double digits over 2006, while the price of a loaf of bread has risen six percent. Chicken is up seven percent, beef costs are more than five percent higher than last year.
And more price hikes may be ahead.
Industry analysts say producers, wholesalers and food manufacturers have all resisted price hikes in order to stay competitive. Up until now, at least. But with shrinking margins and rising transportation and labor costs, the sticker shock consumers experience at the gas pump could soon move to the supermarket checkout counter.
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