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Postby rachelsummers » Wed Dec 26, 2007 11:23 pm

'08 forecasts: food at least 3% higher; gas up 10.7%

By Karen Robinson-Jacobs
The Dallas Morning News

DALLAS — For cash-strapped consumers already beset by higher gasoline prices and escalating mortgage rates, the hits just keep on coming. This time, it's food.

The sharp rise in food prices seen in 2007 is expected to be followed by another higher-than-normal jump next year, the U.S. Department of Agriculture (USDA) said last week. And 2008's punch will be to the breadbasket.

Items made with wheat (breads and crackers) and soybean oil (cooking oil and fried foods) are expected to rise so much next year that they'll boost the cost of cooking at home by up to 4.5 percent — half a percentage point more than predicted just a month ago.

So pinched consumers thinking they can cut back by eating at home more will find little relief there. Home cooking remains less expensive than eating out, but the gap is closing.

This year is expected to go on record as having one of the largest increases in food prices since 1990 — a jump of 4 percent, according to USDA economists. And 2008 will bring an additional rise of at least 3 percent, according to the USDA forecast. Both rates are substantially higher than the 2.4 percent gains seen each year in 2005 and 2006 and the 1.8 percent rise in 2002.

Meanwhile, the Energy Information Administration forecasts a 17.7 percent jump in crude-oil prices next year, with a corresponding 10.7 percent boost in the price of a gallon of regular gasoline. So just driving to the grocery will cost more.

While consumers watch grocery and gas costs increase, economists chart the rise of the pain inducers. Ephraim Leibtag, an economist with the Economic Research Service of the USDA, spent Monday morning bumping up estimates for 2008 price increases for grocery items such as fats, cooking oils, cereals and bakery products.

The growth rate escalated beyond estimates made just a month ago after the USDA looked at November's consumer prices. Not everything is getting more expensive. The price of eggs, for example, is expected to drop next year by at least 2 percent after running up 28 percent in 2007.

"We're talking about prices [for wheat products] that are double, in some cases triple a year and a half ago," Goldman said. Inflation is hitting the whole-grain breads health-conscious consumers have been favoring.

Meanwhile, the price for oils, especially soybean oil, is expected to climb 5 percent to 6 percent as soybean farmers — seeking ample waves of gain — switch to corn. Corn farmers are reaping higher prices as more corn is diverted from animal feed to fuel. But the ethanol infusion is not enough to keep gas prices from rising.

While consumers can't go out and drill for oil, Rayola Dougher, a senior economist with the American Petroleum Institute, notes that measures such as keeping tires properly inflated, not carrying extra weight and slowing down can save fuel. "If you stack these things up, it can make a difference at the pump," she said. And those changes won't affect your life as much as cutting out food.

http://archives.seattletimes.nwsource.c ... ery=food++
rachelsummers
 
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