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Higher prices for food are about to get worse
Wed Mar 16, 4:24 pm ET
WASHINGTON – Americans are noticing higher prices at the grocery store, and it's about to get worse.
Food prices at the wholesale level rose last month by the most in 36 years. Cold weather accounted for most of it, forcing stores and restaurants to pay more for green peppers, lettuce and other vegetables, but meat and dairy prices surged, too.
Paul Ashworth, an economist at Capital Economics, says his firm has warned since last summer that spikes in commodity prices would eventually work their way down to wholesalers and consumers, "and here it is. There is plenty more to come over the next few months."
...Last month, the World Bank estimated that higher prices for corn, wheat and oil have pushed 44 million people into extreme poverty since last June.
Americans spend a much smaller portion of their budgets on food — about 14 percent — compared with 40 percent to 50 percent in developing countries. Labor makes up a bigger portion of food prices in the U.S., while in developing countries people are more likely to buy items like wheat to make their own bread, making them more susceptible to swings in commodity prices.