Avatar of admin


Fed, Farm and Trade Policies Inflating Our Grocery Bills

August 12, 2013 in Economics

By Scott Lincicome

Scott Lincicome

Monthly U.S. headlines trumpeting the death of inflation hide a painful truth for American families: rapidly rising food prices.

News reports rarely mention this pain because economists’ preferred inflation metric, so-called “core CPI,” omits both food and energy due to concerns about their volatility.

Although this omission might make sense from a purely economic perspective, it does a disservice to voters because several federal government policies that enrich a few special interests have conspired to keep American grocery bills high and rising.

There can be little doubt that food prices have spiked in recent years, especially in relation to other goods and services.

According to the St. Louis Fed, food inflation was 22% between January 2006 and June 2013, while core CPI clocked in at only 15% over the same period. This divergence grew following the recession, with food prices (9%) far outpacing core CPI (5.9%) since late 2009.

Certain family staples fared even worse: over the past five years, for example, the average price of meat, poultry, fish and eggs is 16.2% higher.

Food inflation’s impact on American families is real and significant. One industry consulting firm recently estimated that between 2006 and 2012 the typical family of four paid $2,055 more per year in food bills than it would have if these costs hadn’t suddenly started trending up.

This added expense disproportionately hurts poor American families, particularly in this time of high unemployment and stagnating wages, as they’re forced to use an ever-increasing share of their never-increasing budgets on essential foodstuffs.

Food inflation’s impact on American families is real and significant.”

Although market forces like increasing global demand and recent droughts have undoubtedly helped to push food prices higher, there is also little doubt that U.S. laws and regulations add insult to injury.

For starters, archaic trade restrictions that shield certain food producers from international competition inflate U.S. prices for many foods. According to the U.S. International Trade Commission, these artificial barriers to free trade make dairy, sugar, tuna and other foods much more expensive here than they are overseas.

Thus, for example, protectionism forces a working mom to pay substantially more for a stick of butter than her foreign counterpart, and the proceeds from this “butter tax” go directly into the pockets of U.S. dairy farmers.

As bad as these laws are, however, they can’t explain the recent spike in domestic food prices because the trade restrictions are decades-old. That blame instead …read more

Source: OP-EDS

Leave a reply

You must be logged in to post a comment.