|Forget caviar and lobster; basics are pricey enough|
Thursday, August 16, 2007
MIDLAND, Va. - The Labor Department's most recent inflation data showed that U.S. food prices rose by 4.1 percent for the 12 months ending in June, but a deeper look at the numbers reveals that the prices of milk, eggs and other essentials in the American diet are rising by double digits.
Already stung by a two-year rise in gasoline prices, American consumers now face sharply higher prices for foods they can't do without.
The Bureau of Labor Statistics said in its July inflation report that egg prices are 33.7 percent higher than they were in July 2006.
Over the same period, according to the department's consumer price index, whole milk was up 21.1 percent; fresh chicken 8.4 percent; navel oranges 13.6 percent; apples 8.7 percent. Dried beans were up 11.5 percent, and white bread rose by 8.8 percent.
These numbers get lost in the broader inflation rate for all goods and services, which measured 2.4 percent for the same 12-month period. Across the economy, rising food prices were offset by falling prices for things bought at the mall: computers, cameras, clothing and shoes.
"All of that stuff is going down in price, but prices for gasoline have gotten higher, and food prices have gone up," said Mark Vitner, a senior economist for Wachovia, a large national bank based in Charlotte, N.C.
People also go to the mall a lot less than they go to the grocery store, so they constantly are reminded that dietary staples are up sharply, which may go a long way to explaining why, despite healthy job statistics, Americans remain glum about the economy.Meeting with economic writers last week, President Bush dismissed several polls that show Americans are down on the economy. He expressed surprise that inflation is one of the stated concerns.
"They cite inflation?" Bush asked. "I happen to believe the war has clouded a lot of people's sense of optimism." In broad terms, the economic picture isn't bad. Unemployment is near record lows, and the second quarter posted a strong 3.4 percent growth rate. But the picture is bad for those Americans who are pinched by rising food and gasoline costs, and that's a lot of folks. Half the nation's families earn less than the median family income of about $56,000. Three-fifths of U.S. families report income of less than $70,000.
Factors in increase
Why are food prices rising?
It's partly because of corn prices, driven up by congressional mandates for ethanol production, which have reduced the amount of corn for animal feed. It's also because of tougher immigration enforcement, which has made farm laborers scarcer, and a late-spring freeze, which damaged fruit and vegetable crops. And it's because of higher diesel costs to run tractors, and attractive foreign markets that take U.S. production.
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