U.S. consumers brace for fast rising food prices

U.S. consumers brace for fast rising food prices

American consumers are bracing for more price hikes of their grocery items, as beef, milk, coffee and sugar prices have all increased in the past few months, and food companies and fastfood chains like Kellog Co. and McDonald’s Corp.  announced plans to pass along some of the added cost to customers.

Retailers have been reluctant to raise prices because consumers choose to be thrifty during the economic doldrums. Americans are more willing to forego spending on luxury brands and may switch stores or brands to get the best value.

Sara Lee Corp., General Mills Inc., and Kraft Foods Inc. have also announced some price hikes on their products. Coffee giant Starbucks said that it would implement increases on its larger and premium drinks, changing its earlier stance to freeze prices.

Supermarket chains Kroger and Safeway also said that will be passing additional costs to customers.

Retailers are being made to pay for costlier supply from outside vendors, which are dealing with burgeoning demand from emerging economies such as China and India.

Grain prices have skyrocketed, driving up the cost of steak, chicken, pasta and bread products. The increase has been exacerbated by droughts in Russia and floods in other parts of the world.

Overall inflation has lagged behind the escalation of food prices. The Bureau of Labor Statistics reported that the consumer price index for all items other than energy and food climbed 0.8 percent through September, and the food index increased 1.4 percent. The U.S. Department of Agriculture estimates that overall food inflation for 2011 would be between 2 and 3 percent.

Posted by Melanie Mendoza on Thursday November 04 2010, 6:23 AM EDT. Ref: Wall Street Journal. All trademarks acknowledged. Filed under Featured News, Shopping. Comments and Trackbacks closed. Follow responses: RSS 2.0