Friday, April 15, 2016

Americans are paying less for groceries amid global glut of crops

Last year falling energy prices kept U.S. inflation in check. This year it could be the lower cost of groceries. Over the last 12 months, grocery prices have fallen 0.5% based on a component of the federal government’s consumer price index known as “food at home.” It’s only the fourth time in the past 25 years that the cost of food prepared at home has turned negative. Just a little more than a year ago, grocery prices were rising at an almost 4% annual pace. The falling cost of groceries is largely the result of a global glut among crop producers that’s driven down the price of stables such as wheat, corn and soybeans used in many consumer products. The glut has been worsened by a slower world economy. The price of flour and related goods such as bread, for example, have fallen by 4.1% in the past 12 months, according to the March CPI report released Thursday by the Bureau of Labor Statistics. Cereal prices have dipped 1.2% in the same span. American farmers, who just a few years ago benefited from soaring prices, are heavily exposed to the global food glut. Prices of U.S.-grown grains used for food have fallen three straight years, exacerbated by a strong dollar that makes American crops more expensive for foreigners. At the same time, foreign companies can sell food in the U.S. more cheaply. The cost of imported food has dropped 11% in the past year, according to the import price index...more

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