Tags: food | prices | inflation | consumers

IHS Economist: 'Living Standards Will Suffer' as Food Prices Surge

By    |   Wednesday, 16 April 2014 05:10 PM

Food prices are registering sharp gains, climbing 0.4 percent in both February and March and threatening to put a damper on the economy.

The 0.4 percent increase compares with smaller gains for the overall consumer price index of 0.1 percent in February and 0.2 percent in March.

What's happening is that wholesalers have raised the prices they charge grocers, and grocers in turn have passed along the increases to their customers, USA Today reports. That obviously creates a hardship for consumers, who account for about 70 percent of GDP.

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"Living standards will suffer, as a larger percentage of household budgets are spent on grocery store bills, leaving less for discretionary spending," Chris Christopher, an economist at IHS Global Insight, told USA Today.

The bad news may not be over. California's drought will probably push prices upward this year for fruits and vegetables, including avocados, lettuce and berries, Timothy Richards, a professor at Arizona State University's business school, told the paper.

Overall inflation rose to 1.5 percent in the year through March. But given the tenuous state of the economy, some view that advance as a good thing.

"The overall picture is that inflation has stopped falling and is on a gradual uptrend," Thomas Costerg, an economist at Standard Chartered, told Bloomberg. "To some extent, [the price] numbers relieve fears about the U.S. slipping into deflation."

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Economy
Food prices are registering sharp gains, climbing 0.4 percent in both February and March and threatening to put a damper on the economy.
food, prices, inflation, consumers
246
2014-10-16
Wednesday, 16 April 2014 05:10 PM
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