Breakfast foods are getting pricier

NEW YORK — Breakfast is now being served with a side of sticker shock.

The price of bacon is surging and the cost of other morning staples, such as coffee and orange juice, is set to rise because of global supply problems, from drought in Brazil to disease on U.S. pig farms.

And it’s not just the first meal of the day that’s being affected. The cost of meats, fish and eggs led the biggest increase in U.S. food prices in nearly 2 1/2 years last month, according to government data. An index that tracks those foods rose 1.2 percent in February and has climbed 4 percent during the past 12 months.

While overall inflation remains low, the increases in food prices are forcing shoppers to search out deals and cut back.

Even though food companies use a range of cost-cutting methods to limit the effect of higher food costs, consumers likely will feel the “ripple effects” of rising commodity prices, according to the Grocery Manufacturers Association, a trade organization for more than 300 food, beverage and consumer-product companies.

A rundown of why breakfast food costs are rising, and why they could keep going up:

Bacon

Bringing home the bacon is costing more.

The price of lean pork in the futures market is at record levels and is up 52 percent since the start of the year, to $1.31 a pound. Traders are concerned about a deadly virus in the U.S. hog population.

That could further boost bacon prices, which were already rising after farmers cut pig production because of higher feed costs. Those costs climbed after a drought in 2012.

The average price of a pound of sliced bacon in U.S. cities was $5.46 in February, up from $4.83 a year earlier and $3.62 five years ago, government data show.

The retail price of pork is projected to climb by 2.5 to 3 percent this year, according to government forecasts.

Coffee

You need your morning brew, and you’ll likely pay more for it, at least at the supermarket.

Coffee futures have surged 57 percent this year and this month rose above $2 a pound for the first time in two years. Coffee-growing regions of southern Brazil, the world’s largest coffee producer, have been hit by drought. Analysts are forecasting that Brazil’s crop could shrink by about 20 percent this year.

Shoppers should be prepared to pay more at grocery stores, if the current trend continues for more than a month, said Dan Cox, the president of Coffee Analysts, a company that tests coffee quality for retailers.

“Whether it’s by the can or the bag, consumers should probably expect to pay 50 cents per pound more, fairly soon,” Cox said.

The average price of coffee in U.S. cities was $5 a pound in February, although that was little changed from a month earlier, according to government data.

Orange juice

Orange juice futures are up 12 percent this year and climbed as high as $1.57 a pound on March 6, their highest prices in two years.

To be sure, moves in retail food prices won’t match the wild jumps in commodities markets, said David Garfield, a consultant at Alix Partners who advises food-makers. The reason: Food companies worry about losing market share and will absorb some of the higher costs rather than risk losing customers.

“People would be up in arms if every time they went to the grocery store the prices of their preferred items were jumping up and down,” says Garfield.

The price of a 12-ounce can of frozen orange juice edged up in February to $2.43, from $2.41 in January, according to government data.

Source:

www.dispatch.com