Grocery inflation likely to ease in 2009

The Chicago Tribune
By Mike Hughlett Tribune reporter
December 26, 2008

Though some crop prices have fallen dramatically, it can take 6 months for the costs to work their way to store shelves

Corn prices have fallen dramatically since summer, and wheat and soybeans have plummeted from historic highs too.

Meanwhile, the price of fuel, the potion that helps turn commodities into foods and allows those foods to be ferried to grocery stores, has fallen off a cliff.

So why is grocery inflation hovering at levels not seen in almost 20 years—and will it finally ease in 2009?

Spikes in commodity costs can take six months to work their way from the farm to store shelves, economists said. That means food inflation should retreat in 2009, but not necessarily back to the levels consumers were used to seeing, agricultural economists said.

Meanwhile, long-term trends that have been pushing food prices higher—growing global demand and an increasing flow of grains to fuel production—may hibernate a bit as the world's economy slows. But don't expect them to go away, economists said.

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