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June 18, 2008

Economy: When America Gets An Economic Cold, The Rest Of The World Gets Pneumonia

  In the States, food prices have reached a18-year high.  Bad weather, bad harvests and the demand for biofuels all add up to increased produce prices, shopping pressures and the result is more consumers are heading for discount supermarkets.

American families already feeling the pinch caused by soaring energy costs are taking another big hit to their household budgets as food prices increase swiftly.  Milk, cheese, eggs and cooking oil have all increased in price by 20% since last May.  Meat and bread were up by 9%; fish and vegetables were up by 7% and fruits increased by a more modest 2.4%.  The cost of living is now the highest since 1990 with half of the increase accounted for by food prices.

Escalating food costs could present a greater problem than soaring oil prices for the national economy because the average household spends three times as much for food as for gasoline.  Food accounts for about 13 percent of household spending compared with about 4 percent for gas.

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