Food Prices Rising

Grocery prices "have risen significantly over the past year or so."
Sarah Palin, Sunday, November 7th, 2010

When Sarah Palin made the statement above last November, she was derided by an economics blogger at the Wall Street Journal who said she was clearly wrong because governement statistics for 2010 showed little change in the consumer price index. She countered with "That's odd, because just last Thursday, November 4, I read an article in Mr. Reddy's own Wall Street Journal titled 'Food Sellers Grit Teeth, Raise Prices: Packagers and Supermarkets Pressured to Pass Along Rising Costs, Even as Consumers Pinch Pennies.'"  Blogger Reddy countered with yet more government statistics. For a detailed account see Politifact.com which credits both sides and gives Palin a "Barely True" rating since "risen significantly" was more perceptual than factual last November.

What a difference a few months make. Every few days I see stories of rising food prices and dangers of global food shortages. If Palin had simply said, "Prices are begining to rise," she would have been spot on. Saddly the media is way too eager to examine every word Palin says with a microscope to find mistakes instead of looking at the intent behind the words. The quote above was part of a speech urging the Treasury Department NOT to encourage inflation. Inflation is good for national debt as it decreases the value of the debt. But inflation is not good for families and Palin was pointing to rising food prices as an example. Was this a good example? Not really. The price of some food was impacted by the price of oil and by crop shortages, but not by inflation. This is what an intelligent and thinking media should have pointed out instead of using the CPI to claim prices were not rising at all.

Can we trust the government's Consumer Price Index? The answer may be no in the UK (Official statistics hide true increase in cost of living). The US CPI may be equally misleading. U.S. Economy: Consumer Prices Rise More Than Forecast.  Just look at recent headlines.

"Kraft says more price increases ahead, Kraft's 4Q price increases weren't enough"
 Kraft is feeling the pinch from higher costs for wheat, corn, sugar and other commodities.

World Bank: Food prices at "dangerous levels"
Global food prices have hit "dangerous levels" that could contribute to political instability, push millions of people into poverty and raise the cost of groceries, according to a new report from the World Bank.

U.N. Food Agency Issues Warning on China Drought
A severe drought was threatening the wheat crop in China, the world’s largest wheat producer.

AP Video on rising food prices: http://www.woh.rr.com/video/1784460599

Bottom Line

I expect food prices to continue to rise. Just about everything affects the price of food - bad weather, rising oil prices, government monetary policy, national debt, global population growth, etc. It would be wonderful to have a 2nd green revolution where science saves the day and creates cheaper food but don't count on it. Modern advances with genetically modified food are called "Frakenfood" and shunned by the public.

Stock up on affordable items and take advantage of sales and discounts. Food storage is a hedge against inflation.