Tags: Food | Prices | Skyrocket

Report: Food Prices Already Starting to Skyrocket

Monday, 09 Aug 2010 10:17 AM

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Experts warn that overall food-price inflation is inevitable, as Wal-Mart reportedly has already hiked prices amid a recent jump in wheat prices and the failure of the Russian harvest.

The most immediate impact will be felt in the price of bread and bakery products but other food items which make use of grain will also rise, according to analysis from Verdict research. This includes some meat products where grain is used as animal feed.

Meanwhile, a recent JPMorgan survey of supermarket pricing in Virginia showed a 5.8 percent increase in average prices at Wal-Mart, which represents the most significant sequential increase since the inception of the study in January 2009, the Business Insider reported.

The survey compared a 31 item like-kind basket at a Wal-Mart Supercenter, Kroger, Safeway, Harris Teeter, and Whole Foods, the Business Insider reported.

Should wheat prices remain elevated for the next few months, shelf prices for many products could go up by 6.7 percent within a year, Verdict reported. Some items, such as croissants, could go up by as much as 11.1 percent.

While the failure of the Russian wheat harvest has caused a temporary spike in prices, these high prices won't last for long because of excess production in China and the United States. But global fundamentals are supportive of a long-term rise in the price of food, The U.K.'s Telegraph reported.

At the moment there are just fewer than 7 billion mouths to feed around the world. The United Nations believes there will be more than 9 billion people by 2050.

In fact, the UN's Food and Agriculture Organization forecasts that total world demand for agricultural products will jump 60 percent between now and 2030, rising much more rapidly than the population.

This rapid increase is because the areas of the world where the population is rising the fastest are also the areas of the world that are moving out of poverty, the Telegraph reported.

Demand for grains in emerging markets increases more than the population because of one simple fact – richer people eat more meat. This increases demand for grain feeds for livestock over and above that used for human consumption.

Ironically, a wheat stockpile in India that could feed 210 million people for a year is starting to spoil because the government lacks enough warehouses to store it.

According to a government estimate obtained by The Associated Press, 17.8 million metric tons of wheat are exposed to the elements — stored outdoors, under tarps in India's pounding monsoon rains. The wheat could alleviate hunger in a nation where one in two children are malnourished.

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