Food Prices Rising, Fast
While the U.S. Labor Department reported that food prices rose 4.2 percent in the last 12 months, a closer examination of the inflation data shows the price of milk, eggs and other essentials rose by double digits.
Along with record-high gasoline prices, the typical American consumer must now endure a drastic rise in the cost of food essentials.
The Bureau of Labor Statistics reported that egg prices are up 33.7 percent from last year. If the average American wanted a glass of milk with those eggs for breakfast, he would have to pay 21.1 percent more than last year for that same glass. Add a slice of toast and our typical American pays 8.8 percent more than he would have last July. A navel orange to round out the meal would cost 13.6 percent more.
Chicken, dried beans and apples are also more than 8 percent higher in price than last year.
That’s why polls reveal that Americans list inflation as a major concern in the economy, even though the government’s Consumer Price Index (cpi) was virtually unchanged in July, and up only 2.4 percent from a year ago.
But as the food data proves, we must be careful when we read government inflation statistics. The ability to weight, add, subtract or modify the many items in the data set makes just about any inflation reading possible. Most people don’t care that the price of parsley or chocolate bars fell, because they are not diet staples. Yet, these figures average down the official food inflation rate. Similarly, when skyrocketing food and energy costs are offset by the dropping prices of non-essentials like computers, cameras and tvs, the cpi can appear relatively benign. Unfortunately for the average consumer, government-published inflation data does not negate the reality of soaring costs for essentials such as food, energy and housing.
According to the McClatchy news service, the recent increase in food prices is a result of weather damaging crops and congressional mandates for ethanol production, which have reduced the amount of corn available for animal feed and driven up many corn-dependent food prices.
On the whole, increasing food prices alone probably won’t break most consumers, who spent 12 percent of their income on food in 2005. Nevertheless, they are a concern for the economy as a whole. America is a consumption-based economy, and if consumers are forced to cut back, it could lead to trouble.
For more information on the American consumer and his part in the economy, read “The Burden of John Q. Consumer.”