Friday, November 4, 2011

Food Price Inflation, Job Loss, & the National Debt

More stores closing, more jobs lost:

The Gap plans on closing 189 locations or 21% of its namesake stores (Old Navy and Banana Republic) by the end of 2013 but plans to open more stores in China (from 15 by end of the year to 45 by end of next year).

Discount retailer Syms and its subsidiary Filene's Basement have filed for bankruptcy protection and plan to close all 46 of their stores.


1 in 15 people in America now living in poverty.

44 million + (15%)  Americans are benefiting from Food Stamp (Supplemental Nutrition Assurance Program) program. The program is facing possible cuts as policymakers search for new ways to curb the rising cost.

National debt is closing in on the $15 Trillion mark. 

Food price inflation:
The price of food is expected to increase 3.5 to 4.5 percent this year overall

With Halloween over, the nation’s thoughts turn now to Thanksgiving.  This most American of holidays is a cornucopia of culinary delights -turkey and dressing; mashed potatoes and gravy; cranberry sauce and all the other traditional Thanksgiving dishes which are at the heart of this celebration.

One of the greatest aspects of life in this country is the fact that overall, we as Americans enjoy a true abundance of food. According to the U.S. Census Bureau, this year U.S. farmers are expected to produce 750 million pounds of cranberries, along with 2.4 billion pounds of sweet potatoes, 1.1 billion pounds of pumpkins and more than 2 billion bushels of wheat, the essential ingredient for bread, rolls and pie crust. The typical American consumes 13.3 pounds of turkey each year, with no doubt a hearty helping eaten at Thanksgiving time.  As you may have noticed if you have visited the grocery store recently, prices for all this abundance have been on the rise. Thus, the question is: how much more will the Thanksgiving feast cost us this year?

Price inflation is measured by the changes in the Consumer Price Index (CPI).  The CPI is a measure of the level of average prices paid by urban consumers for a defined market basket of goods and services, including food.  The CPI for “food at home” is a component of the full CPI and is the principal indicator of changes in retail food prices. Thus, the CPI for food consumed at home and its changes are an accurate measure of price inflation for food items.

The 6.3% rise in “food at home” prices over the year has been much higher than the 3.9% increase in overall prices.  Food commodities such as soybeans, corn and wheat, along with energy prices, have increased over the past year. These increases, combined with a weak U.S. dollar, have caused most of the grocery store price increases which have been observed in 2011.  Several key ingredients for the Thanksgiving feast have risen substantially over the past year, including turkey, which is up 7 percent to an average of $1.68 a pound.  So, that 10-pound turkey, which cost $15.66 last year, is going to set you back $16.80 this year.  Other food items with above average price increases include: white potatoes, up 23%, dairy products, up 10.2%, fats and oils, up 11.3% and fruits and vegetables, up 6.7%.  Thanksgiving dinner is still going to be well within the reach of most American families, but it is going to be more expensive this year.

No comments:

Post a Comment