Quote of the Day: Hard to Ignore Soaring Food Prices

Last week, the WSJ observed that 3 major food companies were having "their lunches eaten by soaring commodity prices. Costs at Campbell Soup (CPB), J.M. Smucker (SJM) and Hormel Foods (HRL) rose faster than sales in the prior quarter ended in October, helping to push their share prices lower at a time when such defensive stocks ought to be in high demand."

While Campbell reported a 6.7% year-over-year revenue growth, its costs of goods sold rose 8.7%. Same thing at Smuckers: a 17% sales growth, but a 19% jump in costs. Even though Spam-maker Hormel had an 11% drop in hog prices, high feed costs hurt its Jennie-O Turkey Store division.

After years of absorbing these cost increases, it's reached the point where there is little choice but to pass price increases on to consumers. According to an AC Nielsen survey, eight U.S. branded-food companies had raised prices by more than 2% over the 12 weeks ended Jan. 26. Annualize that, and it's a nearly 9% price increase:

"This is all hard to ignore...unless of course you're an economist. They often disregard food prices when measuring inflation."

And that's our quote of the day.

Thanks, Mark!

Source:
It Is Hard to Ignore Soaring Food Prices
Mark Gongloff
WSJ, February 15, 2008; Page C1
http://online.wsj.com/article/SB120303447307470075.html

Comments

[BenHoldsworth]

Food inflation cost transfer to the consumer may have been delayed in the US, but not elsewhere. There is major food inflation across the globe impacting consumers. The chart and article below depicts cost increases in Dubai/the Gulf from Feb 07- Feb 08.

It is a potential indicator of what may be coming for the US consumer.

archive.gulfnews.com/i...

[Lily]

With food prices going up I am grateful that I found a prescription discount card to keep my meds’ prices down. It’s at rxdrugcard.com. The membership fee is only $4.50 a month. Drug prices are shown on that website to check before you enroll. You can save up to 80%. Generics and brand-name drugs are both covered.