The Producer Price Index (PPI), which tracks prices at the wholesale level, showed a 2.4% month to month increase in food costs for March from February. the Bureau of Labor Statistics reported this morning. That was the biggest month to month increase in 10 months. The jump was driven by increases in prices for grains, vegetables, cooking oils, and pork.
This is bad news for future Consumer Price Index (CPI) inflation–which hit an annual rate of 8.5% in yesterday’s report for March–since the CPI tends to track changes in the PPI with a lag of month or two.
Year over year food prices increased at a 16.2% rate. That’s the largest annual increase in records dating back to 2010.
The hurt of higher food prices doesn’t get distributed evenly across the income scale in the United States. Lower-income families in lowest 20% of the income scale spend 18% of their income on food and energy versus 11% for families in the highest one-fifth group, according to Bloomberg Economics.
