The inflation train has left the station

On the subject of inflation, this just in from the American Farm Bureau Federation:

Retail food prices at the supermarket increased slightly during the fourth quarter of 2010, according to the latest American Farm Bureau Federation Marketbasket Survey.

The informal survey shows the total cost of 16 food items that can be used to prepare one or more meals was $46.97, up 80 cents or about 2 percent compared to the third quarter of 2010. Of the 16 items surveyed, nine increased, six decreased and one remained the same in average price compared to the prior quarter. The total average price for the 16 items was up $4.07 (about 10 percent) compared to one year ago.

Bacon, eggs, whole milk, sliced deli ham and bread increased the most in dollar value compared to the third quarter.

Bacon increased 68 cents to $4.32 per pound; eggs and whole milk increased 19 cents to $1.60 per dozen and $3.35 per gallon, respectively; sliced deli ham increased 18 cents to $4.84 per pound; and bread increased 14 cents to $1.75 for a 20-ounce loaf.

“Hearty breakfast lovers felt the pinch in the fourth quarter of 2010,” said AFBF Economist John Anderson. “Increased consumer demand for meats and dairy products that began in 2009 continued through the fourth quarter of 2010. Wholesale meat supplies remained tight in the fourth quarter of the year, due to smaller livestock herds and poultry flocks, which also contributed to the retail price increases our volunteer shoppers reported.”

Other items that increased in price since the third quarter were sirloin tip roast, up 9 cents to $3.95 per pound; shredded cheddar cheese, up 7 cents to $4.16 per pound; toasted oat cereal and vegetable oil, up 4 cents each to $2.88 for a 9-ounce box and 32-ounce bottle, respectively.

Most items showing an increase in retail price from quarter-to-quarter also showed year-to-year increases. Compared to one year ago, bacon was up 44 percent, eggs were up 4 percent, whole milk was up 10 percent and sliced deli ham was up 11 percent.

“Increasing our nation’s livestock herd to meet the growing demand for meat and dairy products takes time, so we are likely to see retail prices continue to increase for some foods throughout 2011,” Anderson said.

Six foods decreased slightly in price compared to the prior quarter: boneless chicken breasts, down 34 cents to $3.10 per pound; flour, down 16 cents to $1.99 for a 5-pound bag; Russet potatoes, down 13 cents to $2.50 for a 5-pound bag; ground chuck, down 10 cents to $2.83 per pound; and bagged salad, down 6 cents to $2.69 per pound.

Orange juice remained the same in price at $2.97 for a half-gallon.

The year-to-year direction of the marketbasket survey tracks with the federal government’s Consumer Price Index (www.bls.gov/cpi) report for food at home. As retail grocery prices have increased gradually over time, the share of the average food dollar that America’s farm and ranch families receive has dropped.

“In the mid-1970s, farmers received about one-third of consumer retail food expenditures for food eaten at home and away from home, on average. Since then, that figure has decreased steadily and is now just over 20 percent, according to Agriculture Department statistics,” Anderson said.

Using the “food at home and away from home” percentage across-the-board, the farmer’s share of this quarter’s $46.97 marketbasket would be $9.39.

AFBF, the nation’s largest general farm organization, has been conducting the informal quarterly marketbasket survey of retail food price trends since 1989. The mix of foods in the marketbasket was updated during the first quarter of 2008.

According to USDA, Americans spend just under 10 percent of their disposable annual income on food, the lowest average of any country in the world. A total of 92 shoppers in 29 states participated in the latest survey, conducted in late October/early November.

The Farm Bureau article also tracks milk and egg price trends for the fourth quarter of 2010.

Meanwhile, world food prices rose to record levels in December on higher sugar, grain and oilseed costs, and oil prices have reached $95 a barrel. (For my look at how rising fuel costs are affecting agriculture, check CapitalPress.com in a few days.)

It's all only beginning, folks.