High food prices are inevitable in the next few months

High Food Prices Will Escalate Further

High food prices are about to get even higher in the coming months and American consumers are bracing to skimp with their grocery spending. About 14 percent of the household budget in the U.S. is allocated for food.

Wholesale prices grew to their fastest pace in 36 years in February with adverse weather conditions largely to blame. The prices of vegetable, dairy and meat products have all risen significantly and it is all beginning to be felt by consumers as retailers pass on the added costs.

Restaurants, fast food chains and supermarkets were being reluctant to raise already high food prices but can't afford to do it any longer. A 3.9 percent hike in food prices, the largest increase since November 1974, was recorded last month. Crops and produce were damaged by winter conditions in the southern states.

In the world market, prices of commodities such as wheat, corn, coffee, soybeans and other crops have all gone up dramatically in the last 12 months. That in turn resulted to an increase in animal feed, driving up the cost of dairy products and ground beef. Droughts in Russia and booming demand from China and India has also contributed to high food prices.

Indeed, the high food prices is the result of a snowball effect that can squeeze consumer spending, a vital part of the recovery. The consumer price index report due on Thursday is estimated to show a 0.4 percent increase. Economists predict that it will take until at least through the end of the year for consumers to bear with high food prices.

Posted by Melanie Mendoza on Thursday March 17 2011, 6:23 AM EST. Ref: AP. All trademarks acknowledged. Filed under Featured News, Shopping. Comments and Trackbacks closed. Follow responses: RSS 2.0