Rising food prices put strain on consumers
Consumer Price Index data released on Tuesday showed that inflation remains largely in check. But within those figures was more sobering news about rising food prices, which jumped 0.4 percent in March.
The U.S. Department of Agriculture says it expects "normal food price inflation" in 2014, with your regular supermarket bill projected to rise 2.5 to 3.5 percent compared to 2013 levels.
But for some analysts, food prices remain an economic wild card. A new report by Goldman Sachs highlights the major price spikes in beef and other livestock, as well as agricultural commodities such as corn, soybeans, wheat and coffee.
The record-setting drought in the agriculturally-essential state of California, along with similar weather conditions in Brazil, Mexico and West Africa, have put pressure on food prices both in the U.S. and globally. Goldman also points to the ongoing tensions between Russia and Ukraine, which have raised concerns about Ukraine's substantial export crops of corn, wheat and sunflower oil.
Chris Christopher, an economist with research firm IHS Global Insight, thinks that while the overall inflation picture remains "relatively bland" for now, escalating food costs will be a burden for many Americans.
"Average consumers will have no cause to consider inflation rampant," he noted in an analysis of the government's latest inflation numbers, "but living standards will suffer as a larger percentage of household budgets are spent on grocery store bills, leaving less for discretionary spending."
And with food prices expected to continue their climb in the second quarter, Christopher called those increases "a kick in the stomach for those households that have a hard time making ends meet."
Those rising prices are already forcing many families to further stretch their food budgets. In Nebraska, Janelle Shere is looking for discounts as she shops for her spouse and five children. But she worries the family's food bills will outpace her husband's income.
"Just because the grocery store prices rise, it doesn't mean he gets a raise," she told the Omaha World-Herald.
Gary Rodkin, CEO of Omaha-based ConAgra Foods (CAG), says grocery stores have been reducing their margins to keep their prices low and attract bargain-seeking consumers. But he told the World-Herald such practices are unsustainable, and a "race to the bottom."
Meanwhile, many people are turning to hunger relief organizations for assistance. In downtown Memphis, Tenn., the Mid-South Food Bank has reportedly distributed 629,000 pounds of various meats so far this year.
"Families cannot afford to buy meat at this time, particularly senior citizens," Estella Mayhue-Greer, Mid-South's president, told WREG-TV. "We've had seniors tell us they haven't been able to purchase meat in months."