Friday, March 25, 2011

Food Costs

USDA ERS has released projections on the rise of food costs:

The article begins:

Following is the text detailing forecasts for percentage changes in annual food prices, according to the U.S. Department of Agriculture:

Food Price Outlook, 2011

In 2011, the Consumer Price Index (CPI) for all food is projected to increase 3 to 4 percent. Food-at-home (grocery store) prices are forecast to rise 3.5 to 4.5 percent, while food-away-from-home (restaurant) prices are forecast to increase 3 to 4 percent. Although food price inflation was relatively weak for most of 2009 and 2010, cost pressures on wholesale and retail food prices due to higher energy and food commodity prices, along with strengthening global food demand, have pushed inflation projections for 2011 upward.

(full text at link above)

There really is another important aspect to food costs which is rarely discussed. Writers tend to point out how food costs to Americans is less than 10% of income. Averages hide a lot of essential details.

If you divide incomes into 5 groups (quintiles)and then look at the data, the richest 20% spend about 4% of their income on energy and another 4% on food. For the bottom 20%, the picture is quite different. The poor spend 20.6% of their income on energy and a total of 23.5% on food.

To make matters worse, the poor buy from the middle of the store where all the carbs and filler foods are on display. Then there is the problem of further obesity.

There was a time when the poor, particularly the rural poor, could cook good meals from a few cheap ingredients, such as dry beans. But, cooking takes time and the working poor are working too many hours to spend a lot of time in food preparation.

We are becoming more of a two class nation and failing to examine underlying causes.

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