The rate of food inflation is “quite concerning,” according to a Jefferies survey from Houston. This could lead to pressure on manufacturers and retailers:
Our pricing survey in Houston once again showed further price increases coming through to retail. Our average basket is now up over 9% in about a year and increased +1.5% since our last visit to the market in July. Clearly, we are now seeing very sizable price movements in our basket and, even in the robust economic climate in Houston, the size of the inflation being seen is quite concerning. With prices moving significantly higher, a stressed consumer is responding as can be seen with the volume declines and uptick in private label consumption (see our note Nielsen Nuggets, September 15, 2011). If there is a silver lining, the sequential price increases decelerated in the latest survey.
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