The cost of food in the US was up .9% last month, the highest increase in 18 years.
The news reinforces the concern that the rising price of agricultural commodities is taking a toll on the buying power of consumers. That, added to the cost of gasoline, may put some households in a position where they will have to pick among buying food, buying gas, or making mortgage payments.
Looking back, there may be an argument that the Fed eased too much, but that view is overly simplistic. The rising demand for food is international and is being driven, in part, by the need for corn to make ethanol and the displacement of farmers from land in Africa.
The numbers do make it clear that food and gas price inflation are now troubles that are as great as, if not greater, than the credit crisis. It forces the government to fight a two front war and undermines much of the purpose for sending out tax rebates. The amount being distributed to many citizens in not enough to keep them financially afloat.
Douglas A. McIntyre
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