Food Inflation on the Rise

Friday, August 17, 2012
By Paul Martin


Drought, bad crop data, and rising grain prices around the globe have put food inflation on the front pages, raising alarm in many circles. Consumers are concerned, food producers are concerned, businesses are concerned, and governments are concerned. While food may not be a huge percentage of the daily budget for those in the developed world, it is in the lesser developed countries. Food inflation can erode the standard of living in the emerging economics rapidly and when food prices go up too much, governments fall.

Even though we have seen huge moves in grain prices recently, thus far the increase has failed to show up in the U.S. government’s inflation data. This week, the U.S. Bureau of Labor Statistics released its July Consumer Price Index (CPI) inflation data, saying that prices were unchanged in July. The CPI is designed to track prices based on consumer spending patterns. In our opinion, it is not a good gauge of whether the cost of living is rising or falling. The Guild Basic Needs IndexTM focuses on certain food, clothing, shelter, and energy (used for cooking, heating, cooling, and transportation) components to give a truer measure of where the underlying costs of living in America are headed.

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