Food prices rising, one reason may surprise you
Wed, 04 May 2011 21:46:57 GMT —
We all know the price of gas is going through the roof, but it's more than just gas. The price of everything is going up, especially food.
It does hurt a little more to make a trip to the supermarket these days.
Bad weather is part of the reason for higher food prices. Greater demand from other countries plays a role. But economists say the big problem is something you might never expect... there's too much money floating around.
To try to get the country out of its slump, the Federal Reserve pumped lots of money into the economy this year. That big supply of money made each dollar worth a little less, which makes everything you buy cost more, says Coastal Carolina University Economist Rob Salvino. "A decrease in the value of money is a decrease in purchasing power, measured as an increase in inflation."
We caught up with Sydna Stella heading home from a trip to the grocery store. She was picking up some steaks and stuff for breakfast. She's noticed the hike in prices.
"Well, meats and produces and well, really just about everything," she said.
Coffee on the wholesale market, for example, has hit its highest level in 34 years.
Bad weather in producing countries has something to do with that, and greater demand from countries like Brazil and China are pushing other food prices higher.
But Salvino says it's still the money supply that's the big culprit. The Federal Reserve will ease off on that next month and that should help, but Salvino says it'll take awhile. "So when that stops in June, that's not going to be a direct correlation with decreasing prices in June, July, August, September."
Salvino says if higher prices lead to lower demand for.. well, just about everything.. that could have a big impact on an economy that's still struggling to turn around. "The fundamentals underlying the recovery are just honestly not as strong as you would like to see."
Salvino says the collapse of the housing market was so big, it will take years to turn around. He adds, there could be another slump on the way.
What prices are bugging you? What have you noticed climbing the most?