Foodservice Equipment Reports

Food And Gas Price Spikes Push Inflation Indexes Higher

The huge unexpected jump in gasoline prices combined with an anticipated increase in food prices to push the Consumer and Producer Price Indices sharply higher in August, according to the Bureau of Labor Statistics. The PPI rose 1.7% from July while the CPI was up 0.6%. Both increases were the biggest jumps monthly since June 2009.

Still, the core rates of inflation less food and energy remained very moderate in both indices. The core index rose only 0.2% in the PPI and 0.1% in the CPI. For the past 12 months, the PPI is only up 2% while the CPI has gained a very moderate 1.7% on seasonally unadjusted bases.

Wholesales food prices at the so-called “finished” level rose 0.9%, the largest increase since a 1% gain November ’11. Prices rose 0.5% in both June and July. The BLS said a 3% increase in dairy prices and a jump in prices for fresh eggs accounted for part of the increase. A 13.6% spike in gasoline prices pushed the overall energy index at the finished level up 6.4%.

The impact of the wide-spread drought on food prices is becoming apparent further back in the chain. Intermediate food prices were up 2.4% while those at the crude level experienced a 4.6% spike, with a 6.1% increase in the price of grains.

On the consumer side, overall food prices rose 0.2% as grocery-store prices were up only 0.1% and menu prices 0.3%. Menu prices have risen 2.8% in the past 12 months vs. a 1.5% gain for grocery prices. Consumer prices for gasoline rose 9%, pushing the overall CPI energy index 5.6% higher.

Gasoline and other fuel prices are expected to begin their seasonal decline this month, but the impact of the drought on food prices is only beginning to be felt.

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