If Federal Reserve Chairman Ben Bernanke were a soccer mum shopping for corn flakes, he would probably have a different outlook on inflation in the United States of America today.
More evidence of runaway inflation surfaced Thursday morning as the US Agriculture Department forecast food prices to rise more than 3% in 2011, which is close to twice as much as the overall inflation rate.
Speaking at the USDA Agricultural Outlook Forum, US Agriculture Secretary Tom Vilsack acknowledged the stark reality of ballooning food prices while also aiming to assuage apprehensions about their impact.
“We’re keeping an eye on this,” Vilsack admitted, “but I would suggest that as a result of what we went through in 2007 and 2008 we are better prepared to respond as a country and as a globe,”
Taking a different perspective on matters is World Bank chief Robert Zoellick, who believes global food prices have reached “dangerous levels,” a reality bound to intensify as Middle East tensions mount further.
Joining soccer mums and global market analysts in their heightened awareness of inflationary pressures in the US food sector are traders – individuals who are still reeling from the breakneck explosion in grain prices. As of this writing, corn is solidly perched at 2-year highs. And it doesn’t appear a significant, sustained pullback will take place any time soon.
And major food producing companies like Kellogg Co. are aware of this unfortunate reality.
As reported this morning by Reuters, Kellogg Co. – the largest breakfast cereal company in the world – has “boosted prices on many of their products to offset rising costs for ingredients such as grains and sugar.”
According to the same report, poultry and fish are forecast to rise in price by 4%. Fruits and vegetables will spike 3.5%, while a 5% surge is expected for dairy. Sugar and sweets, lastly, are anticipated to climb at least 3% in price.