Are higher food prices coming?
Date posted: August 10, 2012
Consumers may be in for a shock in a few months when they visit the grocery store or supermarket. N.C. State University economist Mike Walden discusses what they’ll see.
“Unfortunately …, I think what consumers are going to see is much higher food prices at the supermarket and grocery store. We’ve been seeing food prices rise somewhere between 2 (to) 3 percent on annual basis. We may see that rate double. And the reason is, in our country where we produce a lot of wheat, corn, soybeans, the midwestern part of the country, there’s been a big drought. People have heard about this. And that means any food product made from those key inputs is going to see an increase in price — things like bread, for example.
“But also what many people don’t realize is those key inputs — wheat, corn, beans, et cetera — they are feed into the meat system. So it’s going to be more expensive to raise meat. And so we’re going to see those costs passed on to the consumer.
“So we could easily see, I think, when we get toward the end of the year, rather than food prices rising somewhere between 2 and 3 percent a year, we could see that double — somewhere between 4 and 6 percent a year.
“And what this is going to do is send up the headline inflation rate — the inflation rate that we see posted every month, I think, is going to be significantly higher at the end of the year.
“So what this means for the consumer is try to be frugal, watch these prices, try to shift your expenditures to try to reduce your reliance on those products whose price has gone way up.”
Category: Economic Perspective