Trend of increasing food costs anticipated to proceed

Americans are noticing a significant rise in food prices recently. Greater competition globally for agricultural commodities is trickling down to U.S. customers in the form of more expensive groceries.

Problem with food costs

Food inflation in January rose 1.8 percent year-over-year, according to the U.S. Consumer Cost Index. With the increasing fuel costs and bad weather, the price for many goods is going up. The need is going up right along with it. There was a huge impact on meat costs. This was where these factors changed cost the most. In January, corn prices went to a 30 month high since supplies are going down. Because corn is used more for livestock feed rather than consumed directly, the price of livestock is rising. Meat is wanted in more developing countries. In fact, China and India are both requesting more meat in their meals. U.S. beef exports have risen nearly 1.5 billion pounds in the past five years.

Average U.S. food costs

Other countries are beginning to bid against U.S. consumers. The supply of meat is limited. There has been an increase in pork prices of 12 percent, beef 6 percent and poultry 2 percent from a year ago. The grocery store costs are increasing in other products too since commodity costs are increasing. There has been a huge increase in bread, milk and egg costs according to January CPI data. Since the coffee bean prices went up 77 percent last year, coffee has started becoming more expensive while cereal isn't as cheap with increasing wheat costs. At the food store in 2011, pork costs are expected to raise the most, more than 10 percent. Beef is expected to go up as well. It is supposed to have a 7 percent increase. U.S. consumers will be eating more chicken, which is expected to rise in price a little more than 5 percent.

Perspective for cost of food this year

Overall, U.S. food prices are expected to rise 3 percent to 4 percent this year, according to the U.S. Department of Agriculture. U.S. lawmakers are trying to act like the food inflation doesn't affect Americans. Last week Federal Reserve Chairman Ben Bernanke told the Senate Banking Committee that effect of food inflation on consumers will be “temporary and relatively modest.”. The Fed doesn’t factor in food and energy costs when it calculates inflation, but more than 12 percent of after-tax income in U.S. households is now spent on fuel and food. Consumers aren't happy with the increases in costs. This is because unemployment is still extremely high while those who are employed are not having an increase in salary anytime soon. About $33,000 a year was the 2008 average made by a taxpayer. Two decades ago, it was not that bad.

Information from

CNN Money

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Seeking Alpha

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Agrimoney.com

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