According to The News Tribune:
DALLAS – For cash-strapped consumers already beset by higher gasoline prices and escalating mortgage rates, the hits just keep on coming. This time, it’s food.The sharp rise in food prices seen in 2007 is expected to be followed by another higher-than-normal jump next year, the USDA said Dec. 17. And 2008’s punch will be to the breadbasket.
Items made with wheat (breads and crackers) and soybean oil (cooking oil and fried foods) are expected to rise so much next year that they’ll boost the cost of cooking at home by up to 4.5 percent – half a percentage point more than predicted just a month ago.
So pinched consumers thinking they can cut back by eating at home more will find little relief there. Home cooking remains less expensive than eating out, but the gap is closing.
This year is expected to go on record as having one of the largest increases in food prices since 1990 – a jump of 4 percent, according to economists at the U.S. Department of Agriculture.
And 2008 will bring an additional rise of at least 3 percent, according to the USDA forecast. Both rates are substantially higher than the 2.4 percent gains seen each year in 2005 and 2006 and the 1.8 percent rise in 2002.
GAS PRICES GO UP TOO
Meanwhile, the Energy Information Administration forecasts a 17.7 percent jump in crude oil prices next year, with a corresponding 10.7 percent boost in the price of a gallon of regular gasoline.
So just driving to the grocery store will cost more.
For many consumers, rising food costs plus escalating energy prices add up to tough choices.
Antonia Flores, a Dallas mother of four, said she and her family have had to forgo meat because of higher food prices.
“When we used to go to the grocery store, we used to buy any kind of meat,” she said through an interpreter at North Dallas Shared Ministries, a charitable organization where the family went to seek help getting food. “Right now, we can’t buy meat. The things that we eat are beans, soup, potatoes.”
While consumers watch grocery and gas costs increase, economists chart the rise of the pain inducers.
Ephraim Leibtag, an economist with the Economic Research Service of the USDA, spent Monday morning bumping up estimates for 2008 price hikes for grocery items such as fats, cooking oils, cereals and bakery products.
The growth rate escalated beyond estimates made just a month ago after the USDA looked at November’s consumer prices. Not everything is getting more expensive. The price of eggs, for example, is expected to drop next year by at least 2 percent after running up 28 percent in 2007.
But elsewhere, 2008 will be a worse year than most. With an anticipated gain of between 5.5 percent and 6.5 percent, cereals and baked goods are expected to see the biggest jump of any single food category, according to the Economic Research Service estimate.
MORE FARMERS TURN TO CORN
The 2008 price hike for the category comes on top of the 4.3 percent rise expected this year.
Leibtag said wheat costs have gone up as supplies have gone down, due in large part to a drought in Australia, a major supplier of America’s wheat. (The Australian drought was earlier blamed for this year’s expected 7.4 percent rise in dairy prices.)
Sara Lee Corp., which has a bakery in Dallas, has raised prices three times, for a total of 15 percent, since December 2006. The most recent increase, 5 percent, was announced Monday but may not show up on grocery goods until next year, said Mark Goldman, spokesman for the company based in Downers Grove, Ill.
“We’re talking about prices (for wheat products) that are double, in some cases triple a year and a half ago,” Goldman said.
Meanwhile, the price for oils, especially soybean oil, is expected to climb 5 percent to 6 percent as soybean farmers switch to corn.
Corn farmers are reaping higher prices as more corn is diverted from animal feed to fuel.
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