Feeling the High Cost of Groceries?
Prices are going up and going up fast. Even with the increase, American families spend less than the rest of the world on food. In 2010, Americans were spending only ten to 11 percent of their income on food, about half of what the rest of the world spends.
Inexpensive food is a thing of the past. Food prices soared almost four percent last month alone! This is the biggest gain since November 1974. Most of that increase was due to a sharp rise in vegetable costs, which increased nearly 50 percent.
What’s Going On?
The price of corn doubled in the last six months. According to the US Department of Agriculture, US corn reserves will drop to a 15-year low by the end of 2011. That means meat and dairy products are also on the rise, because cows are fed corn.
The price of wheat has almost doubled since the middle of 2010. According to Forbes, the price of soybeans is up about 50 percent since last June.
Katelyn knows it’s hard to save pennies when food is more expensive.
The United Nations says the global price of food hit another new all-time high in the month of January. They are projecting the global price of food will increase by another 30 percent by the end of 2011.
Major Price Increases Still to Come
It’s no surprise that food producers will pass on their cost increases. General Mills said it plans to raise prices on one-fourth of its breakfast cereals. The USDA expects cereals and bakery items to increase 2 to 3 percent in 2011. Sara Lee in August said it was raising prices for its breads and deli meats. J.M. Smucker, Kraft Foods and Starbucks have all raised coffee prices.
Global Weather & Food Supply
Major weather catastrophes in various parts of the world is contributing to food inflation:
>Crop damage from the freezing weather in Florida this winter.
>This winter Brazil and Australia were hit by some of the worst flooding they ever saw. This has hampered their food production.
>Russia, one of the largest wheat producers in the world, is still feeling the effects of last summer’s scorching temperatures. Russia imported wheat this winter to sustain it’s cattle herds.
>China is dealing with the worst drought it has seen in 200 years. The drought which expected to last into the 2011 growing season. This will have a huge impact on several provinces that grow two-thirds of their wheat. The Chinese imports of corn may be about nine times larger than the US Department of Agriculture originally projected it to be in 2011.
>Japan is a top consumer of rice. The recent tsunami swept away homes and crops. How much of their rice production will be affected is still to be determined. Add to that catastrophe, possible radiation fallout and there is a giant unknown for crops in Japan.
It is expected the price of groceries will continue its upward climb. One estimate is there will be an additional 4 percent increase this year. If you don’t already have a well-stocked pantry, it’s not too late–you can still prepare:
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