Food prices spike on demand, energy costs
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Food prices spike on demand, energy costs
SCOTT JAGOW: You know that game in The Price is Right where you have to guess how much groceries cost? Well, that might be a tough game to play right now, because food prices are going up fast.
This morning, the federal government came out with the latest price index. It tells us how much we pay retail for bananas and Rice-a-Roni or Hamburger Helper. Prices were up four-tenths of a percent in April, and you’ve got to blame food and gasoline. Marketplace’s Janet Babin reports from North Carolina Public Radio.
JANET BABIN: Economists say overall inflation is rising largely because of higher fuel costs. But the strong global demand for food and dairy products also played a role in the increase. Milk prices are at near-record highs. That’s mostly because instead of growing feed, farmers want to cash in on the alternative fuel frenzy.
Gus Faucher with Moody’s Economy.com says there’s more competition these days for the use of farm land.
GUS FAUCHER: Another factor is the increasing use of ethanol for energy production — so that diverts corn in particular. And we’ve seen a big run up in corn prices because of the strong demand for ethanol.
Core inflation — excluding those volatile food and fuel costs — rose two-tenths of a percent in April. Faucher says that’s well within what the government expects, so interest rates will likely remain unchanged.
I’m Janet Babin for Marketplace.
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