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U.S. Food Prices ‘Spiraling Out of Control’
Posted By admin On May 6, 2010 @ 10:57 am In Economic Crisis | Comments Disabled
May 6, 2010
U.S. food prices jumped by 2.4% in March 2010 in the largest monthly leap in more than 26 years, and the sixth consecutive monthly increase.
The National Inflation Association (NIA) issued an alert to its members April 22 warning that the sharp upswing in U.S. food inflation will soon lead to a situation as severe as that currently plaguing India.
Here are some of the most startling year-over-year price increases in the U.S. markets:
* Fresh and dry vegetables up 56.1%
* Fresh fruits and melons up 28.8%
* Eggs for fresh use up 33.6%
* Beef and veal up 10.7%
* Dairy products up 9.7%
In the alert, the nia reminded its members that it has long predicted food sector inflation, but admitted having “never anticipated that it would spiral so far out of control this quickly.”
The rising prices, alongside pandemic unemployment, have nudged tides of Americans onto the food stamp program. After the 14th consecutive monthly increase, 39.4 million Americans are now enrolled in the program. This figure is up 22.4% from one year ago, and the U.S. government is now paying out more to Americans in entitlement programs than it collects in taxes.
Many pundits are proclaiming that the U.S. recession is over and that inflation threats have been neutralized. But their hasty optimism does not factor in that 58% of February’s year-over-year increase in retail sales was not from improving consumer confidence, but from surging food and gasoline prices. The nia believes that price inflation is also accelerating in many economic sectors besides food and energy, and that any increases in 2010 U.S. retail sales will be the result of inflation.
Partly because the U-6 unemployment rate is on the verge of crossing the 17% mark, many retailers are reluctant to pass rising prices along to consumers. But if they wish to avoid reports of colossal losses to their shareholders, they will soon be forced to do just that.
Before this spike, inflation had not been a driving factor in the current economic downturn, and the Federal Reserve expected inflation to remain low throughout the year. But this unexpected jump in food prices and in other areas could quickly change that, especially when the increases are inevitably passed along to consumers and retail inflation starts to rise.
As shocking as it might be to a nation that has grown accustomed to abundance and convenience, mounting inflation and economic hardship will continue to feed each other, and eventually result in severe food shortages. The seeds of such a crisis have already been sown.
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