Since 2006, Food Prices Have Risen 20 Percent

Food prices grew by 35 percent from 1993 to 2005, or about 2-3 percent each year.

But since 2006, the all-food CPI (Consumer Price Index) is up 20 percent, more than the 14 percent average for all seven items. Only transportation and medical care prices have risen faster than food prices during this time period. This is attributed to rising prices for food commodities including corn, wheat, and soybeans, as well as weather events and exports.

Inflation of the agricultural commodities can largely be attributed to ethanol’s sudden increased demand for corn, and the ripple effect that has had on commodity prices across the board. From 2006 through 2012, ethanol production increased 271 percent, from 4.9 billion gallons to 13.3 billion gallons, until it consumed 40 percent of this nation’s corn crop.

The overall percent spent on food has been downward over the years. In 1930, Americans spent 24 percent of their disposable income on food, and in 2011, they spent about 9.8 percent of their disposable income on food.

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SOURCE: http://www.ers.usda.gov/amber-waves/2013-august/price-inflation-for-food-outpacing-many-other-spending-categories.aspx

8 thoughts on “Since 2006, Food Prices Have Risen 20 Percent

  1. rjs

    found a 1982 newspaper food ad in the attic…
    bananas, 4 lbs / $1
    yams 5 lbs / $1
    cabbage 19c / lb
    grapefruit 5 / $1
    salad sized tomatoes 11 / $1
    green onions 4 bunches / $1
    spanish onions 29c / lb

    Reply
    1. K. McDonald Post author

      So if my CPI inflation calculator tells me that $1 in 1982 is equal to $2.38 today, and bananas are now 4 lbs for 2.20, they cost a bit less than in 1982.

      Your list doesn’t include meats, milk, eggs. In the recent inflation case, most of the food inflation is related to these feed related items.

      As for disposable income, it is not hard to imagine that during the Great Depression, people spent more of their incomes for food. What I’d like to see the report address, and it never does, is how food banks, community programs, and Food Stamps affect these statistics.

      Aren’t you our resident expert on this subject?

      Your insights are welcome!

      Reply
      1. rjs

        of course, i picked produce items cause they seemed cheapest…compare bacon at $1.39, whole ham at 1.69 split fryers at .49 and t-bone steaks at 2.99…

        since this paper co-incidentally the baseline year for the CPI food indexes, and none of them are over 300, i would say that the CPI understates Ohio food inflation over the past 30 years…

        BLS actually has agents go into grocery stores and write down the prices…i cant see how food stamps or other programs would work their way into that data..

        Reply
  2. L.M. Lamer

    K, you need to be realistic. By the way I love your Blog. But you have to consider the real reason commodities have increased in price. Sure ethanol has something to do with it. But it is mainly the rapid price increase of a barrel of oil from $50 to $107 per barrel. I am so tied of listening to the ethanol whipping. It leads me to ask what type of vehicle you drive. If anyone is complaining about ethanol they better be riding a bike or driving a VOLT. As a comparison, corn may touch 20 inputs of our lives, where as petroleum touches 1001 inputs.

    Reply
    1. K. McDonald Post author

      L.M.
      Sorry about the broken record, but in today’s case, you need go no further than the USDA report that I referenced to see where they put the blame. I don’t make these things up.

      The best presentation I’ve ever seen on the subject of the ripple effect of ethanol was this one out of Stanford:

      http://www.bigpictureagriculture.com/2012/11/mandated-corn-ethanols-ripple-effect-on-global-commodity-prices-and-food-security.html

      I highly recommend watching the video and looking at all of their superb graphs, if this subject interests you.

      By now, the globe is adapting, so production of corn has ramped up in response to high prices, dimming the effect, but during the time period that this post addresses, commodity prices related to ethanol were indeed a big factor.

      But, more importantly, is the environmental destruction and the all out production to produce a product that has always been about raising corn prices.

      My car gets about 37 mpg on the highway, I drive about 3,000 miles a year, I frequently go a week without using it, and yes, I bike a lot, including to get groceries. While I also hate to see hypocrisy in those writers who criticize policy, I also don’t see ethanol as a green fuel, so I don’t consider the question relevant in this case. But, that is your answer, since you asked.

      Your point is well taken, however, and respectful.

      Reply

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