Food Prices Continue to Climb

The cost of a dozen large eggs is up 24% and the price of a gallon of milk has climbed 26% between February 2007 and the same period in 2006. These are only two components of overall food costs that have seen their biggest rise in 17 years. Among the reasons given are the monumental increases in commodity costs for wheat, corn and soybeans. These increases are being driven by climbing overseas consumer demand together with expanding U.S. based alternative uses of some commodities such as corn, for ethanol in energy fuels.
The dramatic price increases are beginning to impact shopping behavior with consumers making fewer trips to grocery stores. The annual number of trips per consumer has declined from 61 in 2006 to 59 in 2007.
According to the Wall Street Journal, well known food brands are also taking action to adjust to the higher cost of the ingredients. General Mills has reduced the size of its cereal boxes while keeping the price the same. Pepsico's Frito-Lay is raising prices and reducing the number of chips per bag and ConAgra Foods, Inc. is considering reducing the number of kernels in its popcorn bags.