Food Inflation

August 4, 1978

Report Outline
Concern Over Food Prices
Formation of Farm Policy
U.S. and World Agriculture
Special Focus

Concern Over Food Prices

Food's Role in Current Round of Inflation

Food prices are leading this country's current wave of inflation and, being most visible to the average shopper, may become troublesome politically this fall as mid-term congressional elections approach. The most recent monthly Consumer Price Index, released July 28, marked the sixth consecutive month of steady increases in food prices. They amounted to 9 percent for the first half of the year, making food the fastest-rising segment of the nation's cost of living.

Unlike the situation with most economic goods, there is little margin for people to cut their consumption when food prices rise. And food is a big part of most family budgets. While government statistics indicate that the average household probably spends about 18 percent of its income on food, the percentage is much higher among poor families. For an urban family of four earning $12,000 a year, food costs typically absorb almost half of its income, according to the Department of Agriculture.

Just as food has been the fastest-rising element in the Consumer Price Index in recent months, the leading item involved in high food prices has been beef. Retail beef prices increased 6.6 percent in April, 2.5 percent in May and 5.6 percent in June, the latest month for which figures are currently available. These upturns followed steady increases in January, February and March. Since last October at the beginning of this surge, these increases have added up to 30.7 percent.

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