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Food costs soaring in US after harsh winter. Will higher prices last?

Higher wholesale food prices contributed to a jump in the producer price index in February, the US reported Wednesday. Consumers are likely to see food prices rise at least 4 percent in 2011.

Maria Mateus shopped for groceries at a supermarket in Santa Clara, Calif., on March 8. Analysts expect a hike in meat and dairy prices, in particular, due to the effect of bad weather on feed corn.

Tony Avelar / The Christian Science Monitor

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After several years of almost no inflation, many Americans may be surprised to find some of their favorite foods, from burgers to pizza to a glass of orange juice, rising in price this year.

The producer price index, which measures changes in wholesale prices, rose 1.6 percent last month, mainly because of a jump in food prices, the Department of Labor Statistics reported on Wednesday. The food segment, up 3.9 percent, saw the biggest monthly increase since November 1974, with soaring vegetable prices responsible for about 70 percent of that jump. On Thursday, the government will report the consumer price index.

In the year ahead, expect to see the largest food price increases in the protein group: chicken, beef, and pork, as well as dairy items. One key reason: The price of corn, used as feed by ranchers and farmers, has doubled in the past year. But vegetarians won't get off easy: Produce and orange juice are rising sharply, as well.

Higher food prices have wide economic ramifications and are being watched closely by the Federal Reserve. From a business standpoint, food producers – from agricultural giants to the corner pizza parlor – must raise prices or watch their profit margins evaporate. Many middle-class households are financially stretched to the limit, so any extra expense for such basics as milk or bread makes their life even tougher. Organizations that help the poor with food, moreover, find they can't help as many people because their dollar doesn't go as far.


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