Consumer Concern Rises As Inflation Hits Food Prices

Inflation appears to be rearing its ugly head again in two key areas of the consumer economy. Not only are gasoline prices sudden rising, so is the cost of some food products.

 The latest Producer Price Index from the government shows food costs at the wholesale level jumped 1.2 percent in September. Those costs usually get passed along to consumers, so higher costs at the supermarket could be in the future.

Not surprisingly, a new Harris Poll, commissioned by the Financial Times, finds that majorities of the public in

 the United States, Britain, France, Italy and Spain have become more concerned about the price of food since the global financial crisis, and that most people in these countries and in Germany are spending more money on food or are buying less expensive food.

Worries about rising food prices have been driven in part by the soaring prices of wheat, barley and corn, following poor harvest in Russia, Ukraine, northern Europe and Canada, due to bad weather.  Corn prices are up 13.5 percent and wheat more than 10 percent  after the U.S. government warned of  dramatically lower supplies.

"The pressure on wholesale food and energy prices continues to build and those increases are likely to translate into higher consumer costs," said Joel Naroff, chief economist for Naroff Economic Advisors, of Holland, Pa.

Naroff says September's overall price increases were moderate, except when it concerned food products. All types of meat prices showed significant gains and even confectionery costs were up sharply. 

"Two areas where we know that producer costs get passed through fairly quickly are in food and energy and that is where the greatest pressure currently exists," Naroff said. "There is also every good reason to think it will continue for a while."