Food Costs Rising Fastest in 17 Years
Monday April 14, 4:10 pm ET
By Ellen Simon, AP Business Writer
NEW YORK (AP) -- Steve Tarpin can bake a graham cracker crust in his sleep, but explaining why the price for his Key lime pies went from $20 to $25 required mastering a thornier topic: global economics.
He recently wrote a letter to his customers and posted it near the cash register listing the factors -- dairy prices driven higher by conglomerates buying up milk supplies, heat waves in Europe and California, demand from emerging markets and the weak dollar.
The owner of Steve's Authentic Key Lime Pies in Brooklyn said he didn't want customers thinking he was "jacking up prices because I have a unique product."
"I have to justify it," he said.
The U.S. is wrestling with the worst food inflation in 17 years, and analysts expect new data due on Wednesday to show it's getting worse. That's putting the squeeze on poor families and forcing bakeries, bagel shops and delis to explain price increases to their customers.
U.S. food prices rose 4 percent in 2007, compared with an average 2.5 percent annual rise for the last 15 years, according to the U.S. Department of Agriculture. And the agency says 2008 could be worse, with a rise of as much as 4.5 percent.
Higher prices for food and energy are again expected to play a leading role in pushing the government's consumer price index higher for March.
Analysts are forecasting that Wednesday's Department of Labor report will show the Consumer Price Index rose at a 4 percent annual rate in the first three months of the year, up from last year's overall rise of 2.8 percent.
For the U.S. poor, any increase in food costs sets up an either-or equation: Give something up to pay for food.
"I was talking to people who make $9 an hour, talking about how they might save $5 a week," said Kathleen DiChiara, president and CEO of the Community FoodBank of New Jersey. "They really felt they couldn't. That was before. Now, they have to."
For some, that means adding an extra cup of water to their soup, watering down their milk, or giving their children soda because it's cheaper than milk, DiChiara said.
U.S. households still spend a smaller chunk of their expenses for foods than in any other country -- 7.2 percent in 2006, according to the USDA. By contrast, the figure was 22 percent in Poland and more than 40 percent in Egypt and Vietnam.
In Bangladesh, economists estimate 30 million of the country's 150 million people could be going hungry. Haiti's prime minister was ousted over the weekend following food riots there.
Still, the higher U.S. prices seem eye-popping after years of low inflation. Eggs cost 25 percent more in February than they did a year ago, according to the USDA. Milk and other dairy products jumped 13 percent, chicken and other poultry nearly 7 percent.
USDA economist Ephraim Leibtag explained the jumps in a recent presentation to the Food Marketing Institute, starting with the factors everyone knows about: sharply higher commodity costs for wheat, corn, soybeans and milk, plus higher energy and transportation costs.
The other reasons are more complex. Rapid economic growth in China and India has increased demand for meat there, and exports of U.S. products, such as corn, have set records as the weak dollar has made them cheaper. That's lowered the supply of corn available for sale in the U.S., raising prices here. Ethanol production has also diverted corn from dinner tables and into fuel tanks.
Soybean prices have gone up as farmers switched more of their acreage to corn. Drought in Australia has even affected the price of bread, as it led to tighter global wheat supplies.
The jump has left people in the food business to do their own explaining. Twin Cafe Caterers in lower Manhattan posted a letter on its deli cooler: "Due to the huge increase of the gas, the electricity, the water and all the other utilities, we had to raise the prices a little bit." It went on to say that all its food prices have risen, too.
Wonder Bagels, in Jersey City, N.J., posted a letter from its wheat supplier, A. Oliveri & Sons, saying the recent situation was unprecedented.
"The major mills across the country are using words like 'rationing' and 'shortages' if things continue," it said. "We will sweat out the summer together, hoping there will be some flour left to purchase at any price."
The letter called for an immediate halt to exports and a change in farm policy, "stop paying farmers NOT to grow crops." A new farm bill, stalled in Congress, would expand farm subsidies if it passes, however.
For some Americans, the resulting increases might be barely perceptible. The Cheesecake Factory raised prices by 1.5 percent at the end of February, Applebee's by 3 percent.
But for the poorest U.S. families, the higher costs may mean going hungry. A family of four is eligible for a maximum $542 a month in food stamps, which never lasted the whole month before, Food Bank of New Jersey's DiChiara said.
"Now food stamps go fewer and fewer days of the month," she said.
The Food Bank recently got a letter of its own from a key vendor. Its grim message: Sorry, but the prices they charge the Food Bank would be increasing 20 percent, due to food inflation
The REAL cost of inflation: The Mail's Cost of Living Index reveals food prices rising at SIX times official figure
Last updated at 13:00pm on 18th April 2008
Comments (74)The truth about soaring prices: Food costs are rising at 15.5 per cent a year, according to the Mail's index
The true, devastating scale of rising prices is revealed today - by the new Daily Mail Cost of Living Index.
It shows that families are having to find more than £100 a month extra this year to cope with increases in the cost of food, heat, light and transport.
According to the Consumer Price Index, inflation is running at only 2.5 per cent.
Yet the Mail's index finds that food costs alone are rising at 15.5 per cent a year - more than six times the official rate.
And there are double-digit increases in other "must-pay" essentials such as petrol, gas and electricity.
Many families need to find more than £1,200 extra a year just to stand still.
Once higher mortgage costs are added, millions are having to pay out at least another £2,000 a year to keep their heads above water.
The Bank of England's chief economist Charlie Bean admitted last night that higher food and energy costs are likely to push the Consumer Price Index over 3 per cent this year.
Yet this rate fails to reflect the real problems in homes up and down the country because it includes the cost of luxury items such as flat-screen TVs, whose prices are falling.
It also fails to take increased housing costs into account.
The Mail's new index has been compiled in association with the price comparison websites uSwitch.com and MySupermarket.co.uk.
It will be published monthly to chart the burden of "must pay" bills as families struggle to keep afloat in the midst of an uncertain economic period.
The figures suggest that a household spending £100 a week on food in 2007 will now have to find another £66 a month or £800 a year.
Scroll down for more...
Thieves drill gas tanks to steal fuel
High pump prices prompt thefts
The Patriot Ledger
PLYMOUTH —
Police say it's a 1970s crime wave all over again. Only this time, thieves drilled into gas tanks instead of siphoning to steal fuel.
Someone cut through a fence at King Collision on Holman Road, drilled holes into gas tanks on a pickup truck and mini-van, and stole 30 to 40 gallons of gas, police said.
The incident was discovered by company officials just before 9 a.m. Tuesday.
About five hours later, an 80-year-old Duxbury woman discovered that someone had done the same thing to her car.
Police said the woman parked her car on Aldrin Road Monday night with about three-quarters of a tank of gas.
The tank was empty when she returned to the car about 1 p.m. Tuesday. When she filled it up again, the gas ran out through three holes drilled into the tank, police said.
"This is like back in the gas crisis in the '70s," Plymouth Capt. Michael Belmont said. "Only then they used siphons."
Tamara Race may be reached at trace@ledger.com .
Send instant messages to your online friends http://uk.messenger
Change settings via the Web (Yahoo! ID required)
Change settings via email: Switch delivery to Daily Digest | Switch format to Traditional
Visit Your Group | Yahoo! Groups Terms of Use | Unsubscribe
.
__,_._,___
