Sunday, March 9, 2008

Food Inflation

As inflation starts to become abundantly clear in our every day lives, I'm starting to see more people react to the changes (e.g., Cathy at Chief Family Officer). How do you react when staples like eggs, milk, and flour are steadily on the rise?

Per this article,
"Corn prices have more than doubled in commodity markets over two years, and soybeans nearly tripled, according to DTN, a commodities analysis firm in Omaha. Meanwhile, with poor harvests in major wheat-producing regions, wheat prices have more than tripled."
As corn prices have gone through the roof, so too have those of products that depend on them like milk, beef, and some sweeteners. Wheat prices impact bread, pasta, and a number of other basics that most consumer rely on. Not to mention cupcakes :-D

Perhaps another food related concern to start watching out for is the menu at your favorite restaurant. If average families are feeling the pinch with groceries, it goes without saying that a restaurant or bakery will have a significant reaction. How do they deal with rising costs? How long do they absorb the losses? Do they change the menu or raise prices?

Our favorite local Italian restaurant opted to raise prices. Ugh.

When even McDonald's has to change their Dollar Menu to "Dollar Menu & More," you know the times, they are a changing.

The Wall Street Journal reports that a lot of restaurants are opting for menu changes. Restaurants ranging from popular hot dog stands (e.g., Pink's in Los Angeles) to high-end New York eateries are adding more profitable menu items like pasta, and sometimes eliminating loss leaders (e.g., rib eye steaks). The high cost of meat has also made some restaurants reconsider how to prepare it, while making sure nothing goes to waste. Some are decreasing portion sizes (fine in my book since portion sizes are usually obscene in the first place). And the weak dollar means that European treats like extra-virgin olive oil, wines, and cheeses are far too expensive to use carelessly. In fact, some restaurants have started looking for high-quality local substitutes, which seems like a good practice for the economy and the environment.


JessTrev said...

I'm definitely aware of this and am happy that I've locked in some food costs via a CSA. Local meat and local milk are already high but worth it. I think for us, we will try to go veggie more for both the enviro and cost savings. Apparently, though, food costs are a smaller percentage of families' budgets by a long shot compared to what they were decades ago in the US. And thank *you* for the great post I linked to. Helpful stuff...