Healthy soil and sustainable growing

["Tradingpost" <tradingpost@lobo.net>]

Food Prices See Greatest Monthly Increase in Nearly 20 Years
http://www.washingtonpost.com/wp-dyn/content/article/2008/05/14/AR2008051400927.html
By Howard Schneider
Washington Post Staff Writer
Wednesday, May 14, 2008; 10:54 AM

Rising global grain prices helped spark the largest increase in monthly food 
costs in nearly 20 years, as consumers paid more in April for cereals, baked 
goods, and the dairy, meat and other animal products that rely on feedstocks, 
the government reported today.

Food prices have risen 6.1 percent in the past three months on a seasonally 
adjusted annual basis. The one-month rise between March and April of 0.9 
percent was the biggest since January 1990, according to the Bureau of Labor 
Statistics.

The rise in prices covered all categories of food but was most severe among 
such staple goods as grains and oils -- goods where inflation has touched off 
food riots in some less developed countries and led to concerns about supply 
shortages.

The costs of cereal and bakery products increased 1.4 percent from March to 
April and have risen nearly 20 percent in the past three months on a 
seasonally adjusted basis. Prices for fats and oils jumped more than 5 
percent in April, on a seasonally adjusted annual basis, and have increased 
more than 26 percent in the past three months. Prices for sugars and sweets 
increased more than 10 percent during that same period.

The jump in food prices -- along with a steady rise in the cost of gasoline 
-- clouded an inflation report that otherwise contained good news for 
policymakers.

Overall inflation remained tame in April, increasing by a less-than-expected 
0.2 percent. Excluding food and energy prices, so-called core inflation 
increased just 0.1 percent, or about 2.3 percent on an annualized basis.

The Federal Reserve and other economic policymakers watch inflation closely, 
and the monthly data on price increases has taken on added importance 
following a recent round of interest rate reductions. The Fed has slashed 
rates to try to stimulate investment and spending and stave off a possible 
recession, but some members remain concerned that any extra spending could 
fuel inflation.

Although the overall report was "a pleasant surprise," as one analyst put it, 
the persistent increase in food and energy prices has taken a toll on 
consumer attitudes and pocketbooks -- a concern because consumer spending 
accounts for about two-thirds of economic activity. The BLS, for example, 
also reported today that average weekly earnings fell 0.5 percent in April, 
as a slight rise in wages was offset by price increases and a drop in the 
number of hours worked.

Along with food, rising gas prices have caused concern that consumers will 
have to shift their dollars toward staples and spend less elsewhere.

Although energy prices in April were flat, overall, that was in part due to 
the BLS's practice of adjusting data to account for seasonal fluctuations. In 
this case, gas prices usually rise during this time of year, and recent 
increases in the pump price were in line with what was expected, according to 
a BLS spokesman.

Excluding the seasonal adjustment, gas prices rose about 4.2 percent over the 
month.

The April inflation report, taken as a whole, "will help alleviate some of 
the Fed's concerns over an uncertain inflation outlook," Kenneth Beauchemin, 
an analyst with the Global Insight consulting firm, said in an e-mail.

"Nevertheless, plenty of risk remains," as rising energy prices also force 
food prices higher, requiring consumers to spend more on basic goods, 
Beauchemin wrote. "To what extent, and when, the energy price onslaught 
embeds itself into core consumer prices, is an open question."

Crude oil is now trading at about $125 a barrel, an issue expected to be on 
the agenda when President Bush meets Saudi Arabia's King Abdullah this week.