Rising food prices pinching wallets

By TONY PUGH
McCLATCHY NEWSPAPERS

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A trip to the supermarket has become a costly endeavor. Food prices jumped 4 percent in 2007, up from 2.7 percent in 2006. The food inflation rate for 2008 will likely fall between 3 percent and 4 percent, according to Ephraim Leibtag, an economist with the U.S. Department of Agriculture.

That's no small potatoes for U.S. families and individuals who typically spend about 10 percent of their disposable income for food. But on the brighter side, annual food price increases were much steeper in the 1970s and 1980s, Leibtag said.

"There might be some aftereffects in 2009, but I think by 2010, almost all of this current surge will have taken care of itself and we will revert to our historic average," of about 2.5 percent to 2.7 percent annual food inflation, Leibtag said.

Higher energy costs that make it more expensive to process, pack and ship food for retail sale are the main cause of today's rising food prices. Increased labor and health care costs add to the problem, as do higher commodity costs for items such as wheat, soybeans and corn.

Corn prices began rising in earnest after a 2005 energy bill required more ethanol production from corn. The average price per bushel has gone from $2.29 in 2006 to about $4.28 today, Leibtag said, creating higher prices for food made with corn.

In fact, more than half of U.S. corn is used to feed livestock and poultry. It takes about 7 pounds of corn to produce a pound of beef, and 6½ pounds to produce a pound of pork. A two-liter bottle of soda contains roughly 15 ounces of corn syrup, as well, so the ripple effect from higher corn prices is being felt throughout the food chain.