Food Prices Take A Bite Out Of Budgets

As Americans, we spend 15 percent of our annual income on food, but as food prices continue to skyrocket, CBS News business correspondent Anthony Mason reports, we're getting less for more.

They serve 235,000 meals everyday in Florida's Hillsborough County school system.

"We don't wanna raise the prices, but..." one cook said.

But the school board is considering adding 50 cents to the price of school meals, after its milk bill soared by $1.6 million.

"Everything going up on us," the cook added.

She's right. Over the past year, the cost of a gallon of milk is up 66 cents. A dozen eggs up 45 cents. A loaf of bread: 17 cents. A pound of beef: 15 cents.

Overall, food prices are expected to jump 5 percent this year. That means when you ring up your annual grocery bill, it will cost about $87 more per person.

The reason: a drought in Australia has cut grain supplies to Asia, where demand is surging in countries like China and India. And here at home, 20 percent of our corn is being used to make ethanol which is driving up all food prices.

We haven't cut back our spending. Not yet.

"We're actually spending the same amount," Andy Wolf, an analyst with BB&T Capital, said. "But we're buying less. I call it getting less for more."

"You're seeing customers going more towards chicken or sale items - they are not buying those $24 - $25 steaks like they used to anymore," said Dan Glickberg, vice president of Fairway grocery stores.

"You think prices could go higher still?" Mason asked.

"Oh, they are going to go higher," Glickberg said.

"Really?" Mason asked.

"Yeah. There really is no end in the foreseeable future," Glickberg said.

As Americans, we still spend less than 15 percent of our income on food. But it's getting a little more painful to eat the cost.

  • Anthony Mason

    CBS News senior business and economics correspondent; Co-host, "CBS This Morning: Saturday"