Rising food costs outpace those for all goods, suggesting more inflation to come

In April, how much manufacturers paid for domestically made food rose 1.5% over March – marking the first time this year that growth has slowed, the Labor Department reported yesterday. According to the Bureau of Labor Statistics’ Producer Price Index for April, the month-over-month seasonally adjusted price for food began rising again in January after a brief dip in December – gaining 1.7% in the first month of the year followed by a 2% and 2.5% increase in February and March.

This slowdown mirrors that of all goods, but remains significantly higher, with the cost of all goods growing 0.5% in April over March, which saw a surge of 1.6% over February, according to the PPI. For the year, final demand prices for all goods are up 11%.

Within food, the greatest increase came from eggs, which skyrocketed a staggering 82% from March to April – a reflection of higher feed costs, and limited demand due to the spread of Avian Flu and other factors. Other categories that saw notable increases include fresh fruit and melons, which increased 8.5%, fish and shellfish, which rose 5.1%, pork and grains, up 4% and 3.8% respectively.

While these led increases the pack, they were balanced somewhat across the index by a notable drop of 26.6% for fresh and dry vegetables, a 2.6% drop in the price for beef and veal and a 0.4% dip in processed turkey, according to the BLS .

Transportation and warehousing increases take a toll

Also contributing to potential increases price for food at store shelves in the near future is a 4% increase in transportation and warehousing for finished goods in April over March, which builds on a 4.1% month-over-month increase in February.


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