Food Sellers to Raise Prices, Even as Consumers Pinch Pennies

[somone]

http://online.wsj.com/article/SB10001424052748704506404575592313664715360.html

An inflationary tide is beginning to ripple through America's supermarkets and restaurants, threatening to end the tamest year of food pricing in nearly two decades.

Prices of staples including milk, beef, coffee, cocoa and sugar have risen sharply in recent months. And food makers and retailers including McDonald's Corp., Kellogg Co. and Kroger Co. have begun to signal that they'll try to make consumers shoulder more of the higher costs for ingredients.

For food executives, how quickly to pass along higher costs presents difficult choices. Missteps could be costly when the economy remains weak. Many Americans, nervous about high unemployment, have pledged allegiance to their pennies and are willing to trade down on brands, switch supermarkets, opt for Burger King over Applebee's, or stop dining out altogether to save money.

"The big challenge will be, how much can we swallow and how much can we pass along?" said Jack Brown, chief executive of Stater Bros. Markets, a 167-store grocery chain in southern California. Stater Bros. has seen the prices it pays for cereal rise 5% in recent months. The chain has passed about half the increase on to consumers while making up for the rest by trimming other expenses, such as what it spends on cell phones and delivery truck tires...

[msongs]

1. so where is this famous deflation we are supposed to be having? nowhere! nt

[laughingliberal]

6. I think QE took care of that. Estimates are we'll see consumer goods up 20% within 6 months.

Welcome to the Third World America.

[girl gone mad]

11. It's evident in home prices, rents and in wages.

We will see if retailers are able to pass along the costs of these speculative commodities bubbles onto consumers. I think their sales will get crushed and they will have to capitulate to weakened consumer demand in the end.

[Lindsay]

2. How nice of them to hold off on the increases

until just after the announcement that there will be no Social Security COLA increase for the coming year.

[taught_me_patience]

3. Good thing they strip out food and fuel in "core" inflation stats

Thereby proving that there is no inflation!

[charlie]

4. Oceans of capital sloshing around, chasing returns

Looks like volatility is going to be the new normal.

"The market fundamentals – supply and demand – do not warrant the price increases we have seen," says Torero. Not all harvests have been bad, and after 2008 countries rebuilt grain stocks. "There are enough stocks in the US alone to cover the expected losses in Russia."

The food riots in Mozambique were not due to world grain prices, he says, but because Mozambique devalued its currency, making imported food more expensive.

Markets are responding nervously to incomplete information. First there was a series of shocks: Russia's export ban, lower maize forecasts, then, days later, a US ruling to allow more bioethanol in fuel which seemed likely to further reduce the maize – the main source of bioethanol – available for food. Meanwhile there was no reliable information about grain stocks, which is strategic information that most countries keep secret.

The result was nervous bidding and sporadically surging prices in commodity markets. And that attracted the real problem: investors wielding gargantuan sums of speculative capital and hoping to make a killing. When speculation exacerbated the price crisis of 2008, Joachim von Braun of the University of Bonn, Germany, then head of IFPRI, predicted that it would continue causing problems. "We saw that one coming and it came," he says. "Food markets have new design flaws, with their inter-linkages to financial markets"...

http://www.newscientist.com/article/dn19653-are-we-having-another-food-crisis.html

[TheWatcher]

5. Absolutely Loving, Good, And Full Of Recoveriness.

So a few proles may starve to death, and those Corn Flakes might burn a bigger hole in your Wallet, but the Stock Market has to remain artificially inflated at all costs, so a few broken eggs are necessary for the overall Recovery Omelet.

Look for higher Energy Prices too, which honestly are a small price to pay so that the Bubble can keep going.

Add to that worsening unemployment, a devaluing dollar, and we might be looking at one of the most prosperous times in American History.

Things just couldn't get any better.

Hopefully we can get to the point where there are no jobs at all, so everyone can spend more time with their families watching Bristol cut a rug on her latest appearance of Dancing With the Stars.

Things are definitely looking so up, we never know what the ground looks like again!

This New Normal Rocks!!!!!!!111111

:crazy:

[laughingliberal]

7. +1000 nt

[Individualist]

8. "tamest year of food pricing"?!

Not where I live!

[TwilightGardener]

9. Prices never went back down when they jacked them up because

of supposed fuel costs. I didn't see anything get cheaper when the price of a barrel of oil went back down. Did I miss that?

[robinlynne]

10. for crying out loud. they had a 5% increase in cost. big f-ing deal.

Corporations are so not people.

[alanquatermass]

12. Our fucking Government should DO SOMETHING!!!

Why can't they institute some kind of price freeze?!!!

[Lugnut]

13. Howard Dean still speaks foe me, but.....

Politico? Really?