Today, inflation and food inflation articles are everywhere in the news. But, the recent article that got my attention was from The Tennessean about a food basket survey that they did earlier this month. They found a 12.5% spike in prices for a typical grocery basket filled with staples compared with November 2009. Ouch.
According to a study done last year, Americans spent 10% of their income on food in 2009. As I continue to note, although the reported food inflation figure by the BLS was 1.5% for 2010, according to the same report, the rate of inflation for meat, poultry, fish and eggs was up 5.5 percent and dairy was up 3.7 percent. Beef is up 6.2% from 2009.
Here in the U.S., we spend 44% of our food budgets on dining out, the highest in the world. That means we have slack in our budgets to save money by eating at home. Which we are.
Energy, which was 7% of the average American's budget at its peak in 2008 (compared to 5.5% prior to the recent run-up) crept up 7.7 percent last year.
Clearly, our food and energy expenses are rising quite significantly here in the U.S.
The dollar's value plays a role in our food and energy costs and has fallen again these past two months. Most people in the U.S. forget that we also import food at a rate of 75% of the amount that we export it, or about 85 billion dollars worth, and the price of that imported food is up 13% this past year. Our food imports are growing in volume, too. And we import 70% of our oil, or 700 billion dollars worth.
Adding to price stress is global competition coming from China and other developing nations for energy and all commodities. We are the Alpha dog no more.