Rising food costs ruin consumers' appetites

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February 2011 saw the highest monthly increase in food prices in 36 years.
CBS

LAFAYETTE, Ind. - It's planting season again at the Indiana farm that has been in Alan Kemper's family since 1888, reports CBS News correspondent Dean Reynolds.

He's looking forward to a pretty good year. And why not? The price of the corn he grows has soared 52 percent in the last 12 months. His soybeans are up 41 percent -- all thanks to big demand from the United States all the way to China.

"We're in a global society right now," said Kemper. "The need for food and protein is increasing."

As the global economy is improving, emerging middle classes in the developing world are demanding better diets. More meat. Less rice.

But the demand is increasing now just as bad weather has been reducing supplies in food producing countries. Add in rising cost of fuel and you have a recipe for higher prices at the grocery.

"Definitely paying a lot more for food than I did before -- especially things like produce," said shopper Jean Klein.

February saw the highest monthly increase in 36 years.

"These price increases are a shock because the last two years we've had moderate to almost negligible food price inflation -- well below one percent," said Corinne Alexander, agricultural economist at Purdue University.

But now, the agriculture department estimates a 3- to 4 percent price rise in all food this year -- enough to ruin your appetite.

Pork is up six to seven percent, vegetables up five per cent, eggs up as much as five and a half percent, milk is up five percent. And beef? A four-and-a-half to five and a half percent price hike.

"Nothing this year is going down," said Alexander.

Chicago butcher Bill Barnhisel says that kind of increase turns off his customers.

"If that price keeps getting higher and higher," said Barnhisel, "you know we just are making less and less money."

What makes this even more painful is that while the prices are going up, consumer wages are staying flat.

And the prices are not expected to go down anytime soon. Certainly not before Alan Kemper's crop is ready to harvest next fall.

  • Dean Reynolds
    Dean Reynolds

    Dean Reynolds is a CBS News National Correspondent based in Chicago.