Published on: March 10, 2008The Boston Globe focuses on a story that is likely to preoccupy many newspapers, magazines and news networks in coming months – the fast rise in grocery prices that are stressing many household budgets.
“After nearly two decades of low food inflation, prices for staples such as bread, milk, eggs, and flour are rising sharply, surging in the past year at double-digit rates, according to the Labor Department,” the Globe writes. “Milk prices, for example, increased 26 percent over the year. Egg prices jumped 40 percent.
“Escalating food costs could present a greater problem than soaring oil prices for the national economy because the average household spends three times as much for food as for gasoline. Food accounts for about 13 percent of household spending compared with about 4 percent for gas.
“Rising food prices can be particularly corrosive to consumer confidence because people are so frequently exposed to the cost increases … As with energy, higher food costs cut into discretionary income that buys everything from cars to computers to movie tickets and drives the consumer-based US economy. Falling home values and a faltering stock market have battered consumer confidence, spurring a retrenchment in spending that is contributing to recent job losses and pulling the economy toward recession.
“Many analysts expect consumers to keep paying more for food. Wholesale food prices, an indicator of where supermarket prices are headed, rose last month at the fastest rate since 2003, with egg prices jumping 60 percent from a year ago, pasta products 30 percent, and fruits and vegetables 20 percent, according to the Labor Department.”
- KC's View:
- One of the interesting things about the Globe piece is that the word “recession” is only used once, and that strikes me as instructive. I’d come back to the point I made last Friday…that I tend to agree with the point made recently by IRI’s Thom Blishock, that the economy is not so much going into recession as making a transformation.
Which is much harder to deal with. Recession is something to be endured, always with the knowledge that it eventually will end and thing will go back to the way they were. But transformation…that’s a lot harder, because the world ain’t going back to the way it was. It means we have to make long-term plans - as citizens, as consumers, as businesses – for how we will adjust to new realities.
Tough stuff. But, I think, inevitable.