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The Wall Street Journal reports that “the surge in grain prices that has been stoking food inflation for months in much of the world is beginning to seep into U.S. supermarkets and restaurants.

“U.S. food prices will jump between 3% and 4% this year, the U.S. Agriculture Department forecast Thursday, after rising in 2010 by the slowest rate since 1962. The cost of processing food is soaring in part because foreign demand for U.S. agricultural commodities is surging at the same time the rising price of gasoline is stimulating the biofuel industry's appetite for corn to make ethanol.”
KC's View:
There are a couple of interesting side notes to this story.

One is that as bad as things may get in terms of food inflation, US consumers may be protected to a degree because retailers and manufacturers are concerned that if they raise prices too much, it will have a dramatic impact on shopping behavior.

There also was a Washington Post report that in fact, food prices in India are rising so fast that the country is considering a change in its laws so that foreign-owned companies such as Walmart can own stores there. While there has been a level of protectionism in India, they are so concerned about prices that they’re willing to give it up for some Walmart pricing.