Fuel, Grain Prices Spur Food Price Hikes

NEW YORK (AP) -- This morning, your bowl of cereal and milk probably cost you 49 cents. Last year, it was 44 cents. By next year, it could be 56 cents. It's enough to make you cry in your cornflakes.

The forces behind the rise in food prices -- China's economic boom, a growing biofuels industry and a weak U.S. dollar -- are global and not letting up anytime soon. Grocery receipts are bulging because the raw ingredients, packaging and fuel that go into the price of foodstuffs cost more than they have in decades.

It's the worst bout of food inflation since 1990, but not yet worrisome to the economy, said John Lonski, chief economist of Moody's Investor Service. While high food prices can cut into consumers' discretionary spending, the 4 percent rate of food inflation is still far below the crippling double-digit levels of the 1970s.

Still, consumers anxious for relief in the checkout line may have to keep waiting.

The Associated Press, Oct. 9, 2007