Consumers Start to Feel Pinch From Higher Prices

Posted on 25 February 2011

Wall Street Journal – Friday, February 25, 2011

- By SCOTT KILMAN And JULIE JARGON

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…

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.

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