"Beating a dead horse" - food inflation

%^)

Working with my largest retail customer on an analysis of same store comparative numbers on lemon sales and what future contract pricing might look like in the season ahead and beyond, I came across a couple interesting things on food inflation that I thought were interesting enough to pass along to my fellow "foodies" ...

In a December 26, 2007 article in Reuters analyzing food inflation, Bill Lapp, former economist for food giant Conagra Foods, Inc. said food prices are moving to a new plateau similar to what happened around 1914 and again after World War Two and then in the 1970's. "During the next five years, food inflation is forecast to increase by an [annual] average of 7.5 percent, well above the 2.3 percent average of the past 10 years. The price of commodities such as corn, wheat, soyoil, and milk have already begun to permanently move to a new plateau."

Do the math ... by the end of 2012, the cost of our food will have increased nearly 55 percent from where it is today !

In a January 21, 2007 story in the New York Post, a few items were pointed out to have gone up over just the last year the following percentages -

Milk - 29 percent
Eggs - 36 percent
All dairy - 13.4 percent
Tomatoes - 31 percent
Bread - 10.5 percent

Anybody think we're gonna get a nearly 55 percent raise in our paychecks to offset the rising cost of food ?

NOW I'll throw away this broken record !

Clink !

%^)

Anybody think we're gonna get a nearly 55 percent raise in our paychecks to offset the rising cost of food ?

We've been spoiled. Food is still a bargain, and our shelves are bursting, filled with choices. This phase of increases was pent up for years, with everyone afraid to raise their prices. Now it's going nutso. I remember the last time very clearly - we had our grocery store then and things went up faster than we could mark them. We survived. Inflation sucks but there are investment plays which help offset the pain. Got gold?

We could always institute price controls - then prices would be palatable, there just wouldn't be anything in the market.
To answer your question, yes, I believe wages will rise in step with everything else. It's part of the spiral.

The infatuation with ethanol as fuel hasn't helped matters any.
The pendulum will swing back. Watch and see.

Sorry, I can't afford dead horse anymore.

[Jenise]

Bill, I'm going to need another two-bottle pizza night after reading this!

Anybody think we're gonna get a nearly 55 percent raise in our paychecks to offset the rising cost of food ?

We've been spoiled. Food is still a bargain, and our shelves are bursting, filled with choices. This phase of increases was pent up for years, with everyone afraid to raise their prices. Now it's going nutso. I remember the last time very clearly - we had our grocery store then and things went up faster than we could mark them. We survived. Inflation sucks but there are investment plays which help offset the pain. Got gold?

We could always institute price controls - then prices would be palatable, there just wouldn't be anything in the market.
To answer your question, yes, I believe wages will rise in step with everything else. It's part of the spiral.

The infatuation with ethanol as fuel hasn't helped matters any.
The pendulum will swing back. Watch and see.

I completely agree with everything Mr. Tomasso stated. Great analysis, John.

Further, look at the demand side of the equation. I’m not sure what it is like in Arizona, but in my ‘hood if a grocery store would have opened 15 years ago it would have been a middle of the road regional or national chain store that was essentially no different from any other existing mediocre big grocery store. Today, 90% of the grocery stores opening here are local, independently owned ultra high end markets seeking to outdo the last store to open by providing more variety, better service and even higher quality food. There also is a trend here for stores to provide more locally grown and raised items. If anything, this is a great time for the consumers that support locally owned stores that are trying to raise the bar and also stock locally sourced meat, dairy, fish, produce, etc. Yes, that may mean higher prices, but eliminating that absurd ethanol mandate would lower the prices for the consumer.