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Cost of America's Marketbasket Rising

Cost of America's Marketbasket Rising
Energy prices are the culprit for increasing the cost of food.

The American Farm Bureau Federation Markertbasket Survey reveals that retail food prices at the supermarket increased during the second quarter of 2011. The informal survey shows the total cost of 16 food items that can be used to prepare one or more meals was $51.17, up $2.10 or about 4% compared to the first quarter of 2011. Of the items surveyed, 14 increased and two decreased in average price compared to the prior quarter. The total average price for the 16 items was up about 8% compared to one year ago.

Blame energy costs, says AFBF Economist John Anderson, He says - the effects of continued raw energy cost increases are reverberating throughout the food industry and consumers are bearing the brunt of it. Anderson points out that after food leaves the farm, costs for transportation, marketing, processing and storage come into play. As a result, as energy prices continue to run up, shoppers are feeling the pinch at the supermarket.

“Strong consumer demand for meats and dairy products continues to influence retail prices,” said Anderson. “Consumer demand for meats and dairy products began to recover in 2009, continued through 2010 and is still a factor as we move into the middle of 2011.”

Sirloin tip roast, Russet potatoes, sliced deli ham and bacon increased the most in dollar value compared to the first quarter of 2011. At the same time boneless chicken breasts and shredded cheese decreased in average retail price between the quarters.

“Further retail price increases are likely to be the new normal as we move through 2011, especially for meats. It takes time for farmers to increase the size of their herds to in order to meet higher demand,” Anderson explained.

In the mid-1970s, farmers received about one-third of consumer retail food expenditures for food eaten at home and away from home, on average. Since then, that figure has decreased steadily and is now about 16%, according to the Agriculture Department's revised Food Dollar Series. USDA's new Food Dollar Series may be found online at

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