Friday, February 18, 2011

High Corn and Energy Prices Drive Meat Prices up 6.2% in the U.S. this Past Year

A new monthly CPI report has been released by the BLS. This time food prices have increased even more for Americans.

If you read MSM you may not catch this important story. I reviewed AP coverage and this is what they said, "Food prices climbed 0.5 percent in January, the most in more than two years. Still, food costs in the U.S. are still tame compared with the raging inflation in many developing countries."

The biggest price increase embedded in the new report is that meats, poultry, fish, and eggs have risen 6.2 percent in the past twelve months. These are the foods that rise in price when corn prices go up (and in turn, wheat and soy which are feed substitutes). That's just a fact and there is no way around it. Corn ethanol mandated demand means high meat and egg prices for Americans. Americans are paying for ethanol by providing tax subsidies AND by paying more for their food.

Since energy costs are embedded in food production, transport and storage costs, prices are also directly related to increasing energy prices.

It's no wonder that Senator Mike Johanns from Nebraska is worried. He's torn between supporting his state's ethanol businesses, corn producers, and beef producers. Beef and livestock producers are big time losers and so are we as food and meat consumers. Beef herds have already been culled to a 53 year low in this country.

Here are the latest figures:
  • Increases in indexes for energy commodities and for food accounted for over two thirds of the all items increase.
  • The indexes for gasoline and fuel oil both increased in January, continuing their recent strong upward trend.
  • The index for food at home posted its largest increase in over two years with all six major grocery store food group indexes rising.
  • Over the last 12 months, the food index has risen 1.8 percent with the food at home index up 2.1 percent. Both 12-month changes are the highest since 2009.
  • The energy index has increased 7.3 percent over the last 12 months, with the gasoline index up 13.4 percent.
  • The index for all items less food and energy has risen 1.0 percent.
  • The food index rose 0.5 percent in January.
  • The food at home index increased 0.7 percent, the largest increase since 2008.
  • All six major grocery store food groups posted increases.
  • The index for nonalcoholic beverages increased the most, rising 1.5 percent, with the indexes for carbonated drinks and coffee both rising sharply.
  • The fruits and vegetables index increased 1.3 percent with the index for fresh vegetables up 2.1 percent.
  • The indexes for meats, poultry, fish, and eggs and for cereals and bakery products increased 0.9 percent and 0.8 percent, respectively.
  • The indexes for dairy and related products and for other food at home posted slight increases.
  • Over the past 12 months, the index for meats, poultry, fish, and eggs has risen 6.2 percent with the other grocery store food group indexes posting smaller increases.
  • The index for food away from home rose 0.2 percent in January and has risen 1.5 percent over the past 12 months.
  • The energy index continued its recent string of increases, rising 2.1 percent in January.
  • The gasoline index rose 3.5 percent and has increased seven months in a row. (Before seasonal adjustment, gasoline prices rose 3.8 percent in January.)
  • The index for household energy declined in January, falling 0.2 percent. A 6.8 percent increase in the index for fuel oil was more than offset by a 1.2 percent decrease in the natural gas index and a 0.5 percent decline in the electricity index.
  • The indexes for gasoline and fuel oil have risen significantly over the last 12 months, but the index for natural gas has declined 6.4 percent.