Hungry? - Democratic Underground

WilliamPitt

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Sun Mar-09-08 11:00 AM
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Hungry?

Surging costs of groceries hit home
Bread, eggs, milk prices up sharply
By Robert Gavin
Globe Staff / March 9, 2008

American families, already pinched by soaring energy costs, are taking another big hit to household budgets as food prices increase at the fastest rate since 1990. After nearly two decades of low food inflation, prices for staples such as bread, milk, eggs, and flour are rising sharply, surging in the past year at double-digit rates, according to the Labor Department. Milk prices, for example, increased 26 percent over the year. Egg prices jumped 40 percent.

Escalating food costs could present a greater problem than soaring oil prices for the national economy because the average household spends three times as much for food as for gasoline. Food accounts for about 13 percent of household spending compared with about 4 percent for gas.

Rising food prices can be particularly corrosive to consumer confidence because people are so frequently exposed to the cost increases. "It's the biggest risk we face economically, and it might be the thing that does us in," said Rich Yamarone, director of economic research at Argus Research Corp. in New York. "There's nothing really worse than having a job, making money, and forking most of it over just so you can have the same amount of food. You're running in place, and it really weighs on you."

As with energy, higher food costs cut into discretionary income that buys everything from cars to computers to movie tickets and drives the consumer-based US economy. Falling home values and a faltering stock market have battered consumer confidence, spurring a retrenchment in spending that is contributing to recent job losses and pulling the economy toward recession.

Many analysts expect consumers to keep paying more for food. Wholesale food prices, an indicator of where supermarket prices are headed, rose last month at the fastest rate since 2003, with egg prices jumping 60 percent from a year ago, pasta products 30 percent, and fruits and vegetables 20 percent, according to the Labor Department. "No retailer can absorb cost increases indefinitely," said Laura Sen, president of BJ's Wholesale Club, the Natick chain of discount warehouse stores. "Given what we are seeing, all retail channels need to raise prices, and from our observations, are doing so."

Amy Brnger, 43, of Portsmouth, N.H., just needs to look at her grocery receipts. For a long time, feeding her family of three used to cost around $125 a week. Suddenly this winter, her bill leaped to about $200. Quickly, Brnger, a school counselor and mother of a 9-year-old daughter, looked for ways to save. She buys fewer organic products, which can cost twice as much as conventional goods. Instead of buying chicken breasts, she buys whole chickens and cuts them into parts, saving about $2 a pound. She buys dried beans, instead of canned. And she is baking her own bread.

More: http://www.boston.com/business/personalfinance/articles/2008/03/09/surging_costs_of_groceries_hit_home/