High energy prices have led to the fastest increase that food prices have seen in eighteen months. A 3.7 percent increase in gasoline cost during February is one primary cause of food cost increase.
According to the Labor Department, the Producer Price Index-- a program that measures the average change over time in the selling prices received by domestic producers for their output-- rose 0.8 percent in January and 1.6 percent in February. However, when food and energy costs are disregarded, the February increase of 0.2 percent is lower than the previous 0.5 percent increase in January.
Vegetable costs increased almost 50 percent last month, which led to food prices experiencing their largest increase since 1974. The Federal Reserve anticipates these changes and price gains to be temporary. With many increases partially attributable to higher energy costs, concerns about the earthquake in Japan have caused energy prices to drop 4 percent-- however, as Japan recovers, energy costs may rebound.
Posted: 3/24/11
