Sticker shock at pump will increase food prices

April 25, 2011 11:54:10 PM PDT
There is more sticker shock at the gas pump. The weekly report from the U.S. Energy Department shows the national average price for gasoline is now $3.88 a gallon. For California it is up to $4.23 and in San Francisco it is $4.38. Every $1 increase costs the typical family about $1,000 a year.

A new ABC News poll shows 58 percent of us are driving less as a result of the high prices and 71 percent say it is becoming a hardship. It is starting to have an impact in other areas of our economy as well.

"We didn't get tomatoes because tomatoes are 79 cents apiece," said Cindy Misko.

Tomatoes are at their highest price in four years and Misko has five mouths to feed on a single income.

"Even baking at home is expensive now," said Misko.

She may have to tighten her belt even more because the U.S. Department of Agriculture is projecting higher food prices by the end of the year. They expect beef to increase eight percent, pork by 7.5 percent, and fruits and vegetables to go up 3.5-4.5 percent.

"It just means we don't go out that much, we don't go to the movies. I'm thinking about turning off cable," said Misko.

Misko still has her job, but higher food prices could have a huge impact on the unemployed.

"It keeps me from eating filet mignon and lobster. Now, I'm down to chicken wings and canned soup," said Soloman Stone.

The inflation projection is being driving by higher energy and food commodity prices, along with the growing global demand for food.

"The income in developing countries is increasing. So people in China and India and all these other countries want to eat meat rather than to eat vegetables and to eat more," said Prof. David Zilberman, from UC Berkeley's department of Agricultural and Resource Economics.

Zilberman says if Americans are suffering in this global food shortage, the situation will be much worse in other parts of the world.

"When the price of food is very high, some people die and this is the scene that is problematic. So we really need to make sure that as demand increases, we increase supply. Otherwise we are in trouble," said Zilberman.

Zilberman says a global food shortage means we'll see more price fluctuations in the future and he says the world may have to turn to genetically modified food to increase supplies.

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