Friday, April 22, 2011

Food price jumps

Wholesale food prices in the US saw the largest one month jump in Jan-Feb since the 1973/4 food crisis.
Most of the increase was because of a sharp rise in vegetable costs, although meat and dairy prices also jumped. Harsh winter freezes in Florida, Texas and other Southern states damaged crops, driving up vegetable prices. Meanwhile global prices for corn, wheat and soybeans have risen sharply in the past year. That has raised the price of animal feed, pushing up the cost of eggs, beef and milk at the wholesale and consumer level, according to the report. Corn prices are up 59.4 percent from last year. Wheat is up 81 percent, and soybeans are up 29 percent…
However, that doesn’t mean retail prices will go up by that much:
Retailers have focused on cost-cutting and are concerned about passing price increases on to consumers, he noted. "They are very cognizant of the fact that consumers are very budget conscious and they have many options to take their business to alternative retailers -- their competitors," he said. "That plays a major role in them holding increases to a minimum level or not passing them on at all."
Again, this is not about monetary policy. Overall prices went up 0.4%, including the large bump in food prices. That is not how monetary policy affects the economy.

For instance, the rise in chocolate prices to a 32 year high reflects the conflicts in the Ivory Coast and who would collect the tax revenue for chocolate exports, not US monetary policy. Even then, global prices do not always reflect local prices or the timing of price rises:
"We're going to be seeing at least a 30-cents per pound increase in chocolate prices, which is crazy," Oakey said. So far, Oakey says she's locked into a contract this year. So even if cocoa prices rise or fall, she'll pay the same price for chocolates. It's the outlook for next year that's a bit unsettling. "I still have enough to get me through Easter, at least," said Oakey. "But I would say going into the Christmas season, we're going to see some price increases. Either that or change chocolates." … Other chocolatiers, such as Amano in Orem are also feeling an impact in rising cocoa prices, because they're planning their specialty gourmet chocolate purchases a year ahead.

No comments:

Post a Comment