I read on the plane an article in the Economist about "Food Prices - Cheap No More". Interestingly food prices had previously until this year been on the decline. The peak grocery prices hit actually in 1974.
And even now we've yet to reach those prices again. Yet prices this year have been trending up. Due to a couple of different reasons, the use of ethanol to fuel cars and increased meat consumption.
This supposed increase in food prices will most affect poorer countries. But I question if they aren't underestimating the impact on Americans? With the slowing economy, many people's incomes are not rising as quickly as the goods they need to purchase.
Hence the prolonged period of cheap groceries has allowed consumers to spend a smaller percentage each year than if the cost had increased since 1974. This might have also caused them to become used to cheaper prices for years, and now suddenly having to increase the grocery budget is an eye opener.
Where will the extra money come from? How will people deal with groceries rising in costs annually instead of decreasing? Do you really think Americans can handle the jump? Much like how Americans are spoiled with cheap gas, in Europe and Asia, gas can cost $5-7/Liter. Hence we've allowed ourselves to continue affording large SUV/cars.
So will this rise in groceries cause us to curb our spending in other areas or will we just borrow more money to solve the problem?