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February 2011 marked the largest one-month increase in 37 years for wholesale food prices, climbing by 3.9 percent, according to analysis of the latest Producer Price Index Report by the Food Institute, which indicates that wholesale prices have not experienced an increase this great in many years. The recent 4 percent hike was only exceeded in November 1974 when spiraling oil prices resulted in sharp food price increases amounting to 4.2 percent.
While the latest increase in the Producer Price Index for finished consumer foods was driven by a 49 percent jump in fresh vegetable prices due to freezes and other crop issues in many farming areas, price increases of 4 percent or more during the month of February for beef and pork also added to the surge in the overall index.
Of the 17 categories the Food Institute tracks on a regular basis, 13 posted increases during February, led by fresh vegetables; and followed by a nearly 10 percent jump in shortening and cooking oil; a 7.6 percent jump in egg prices; a 4.1 percent gain in dairy prices; and a 3.2 percent jump in coffee prices.
While U.S. food retailers have earned high marks for restraining major price increases for the past 18 months, February’s surge and recent world events promise to make that task far more difficult in the weeks and months ahead.