Tuesday, March 8, 2011

Why You Are Paying More For Groceries

The reason we are all paying more for our groceries is due to increasing worldwide demand for products and shortages of grains and other crops caused by bad weather all over the world. According to the author, increasing costs of basic agricultural production is leading to higher food costs across the board.
The government is predicting that food prices will rise 3-4% this year.
There is a passing mention, at the beginning of the article, of gas prices already stressing consumers – but no real in-depth analysis. Here is my in-depth analysis: We may be wishing we only had 3-4% increases when the year is over if gas prices continue to climb. Unfortunately there are a lot of people out there who believe food just appears at the grocery store for them to purchase. The reality of the situation is that food production/agricultural production requires a ton a heavy equipment – tractors, trucks, etc. This equipment requires a lot of fuel, and there is no replacing this fuel with solar or happy-tree-hugging-whatever. From trucks down to the fertilizers spread on crops – gas prices play a huge part in the cost of food.
Since we have decided that under the Obama Administration gas prices are not nearly as big a deal as under the Bush Administration we can look for steadily increasing costs. The dreaded “stagflation” is also looking more and more likely. But don’t sweat it – we are in a recovery . . . . . . . right.

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