ST. PAUL
In nearly every supermarket aisle, food prices are starting to rise.
General Mills just announced higher prices for breakfast cereals, Yoplait yogurt and Nature Valley granola bars. Last month, it raised prices on flour, pizza rolls and Green Giant vegetables.
Hormel Foods recently raised the price of Spam and Jennie-O turkey, with more increases to come. Caribou Coffee said it will follow other coffee sellers in raising prices. And Target's chief executive said last week, "We will need to raise prices to offset higher costs."
After years of quiet on the inflation front, a six-month spike in the prices of grain, meat, dairy, energy and oil is squeezing through the U.S. food system. The wave hasn't hit consumers full-on, but it's coming.
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"The fact is, all commodities are going up," said Edward Usset, a grain-marketing specialist at the University of Minnesota. "Fiber, fuel, metals, just across the board, everything is going up."
On Friday, corn soared another 25 cents a bushel -- the daily maximum -- meaning that corn prices have virtually doubled in six months. Wheat prices are up 32 percent in that time. Hog prices, up 30 percent. Milk prices, up 21 percent.
The Consumer Price Index hints at the changing tide. In 2010 food inflation was calm, inching up just 1.5 percent. Then in January, food prices rose 0.5 percent for the month, and "all six major grocery-store food groups posted increases," the U.S. government reported.
At Twin Cities restaurants like Keys Cafe & Bakery, higher prices are starting to surface here and there -- in the prices of tomatoes, green peppers or celery. So far, the family-owned cafes have absorbed most of the costs by shopping for bargains and tinkering with recipes, rather than reprinting menus.
"What we try to do is adjust things in the kitchen, so instead of two tomatoes, you use one tomato," said Jean Hunn-Collyard, one of Keys' family owners. Still, holding the line has its limits.
"If it's something that continues and (rising prices) isn't just going to be a one-month or two-month thing, we have to look at it," she said.
Analysts cite a dozen reasons that raw commodity prices have risen so far, so fast.
The economic recovery is lifting demand. Bad weather has zapped harvests. Unrest in oil-producing nations is making markets jittery.
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Speculators are pouring money into hot commodities. And ethanol continues to gobble up corn.
Now, those forces are combining in explosive ways, especially since a wave of revolution roils the oil-rich Middle East.
Corn is mostly an animal feed -- or it was, until corn-based ethanol came into the picture.
Now it's an energy source, too. Whenever crude oil prices skyrocket, so do corn prices. The other grains follow along.
"If they (commodity traders) want to take oil another 10 percent, 20 percent, 30 percent higher, you can bet that will spill over into corn, because 40 percent of this crop is being used to make fuel, not food or feed," said Usset, the U's grain-marketing specialist.
That link is making grain prices especially volatile -- and worrisome this winter.
While higher food prices make U.S. shoppers unhappy, they spell disaster in the world's poorest nations. Already, soaring food prices are blamed for some of the rioting in Egypt and elsewhere.
Last week, former President Bill Clinton urged that the goal of energy independence be balanced with food needs. "We don't want to do it at the expense of food riots," Clinton said.
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The last time commodity prices ran wild, back in late 2007 and early 2008, the story didn't have a happy ending. Prices soared, then collapsed -- wiping out some businesses and helping throw the U.S. economy into a severe recession.
Nobody's sure how this round will end.
When Target officials were asked about inflation in 2011, they punted.
"I do resist putting a concrete number on it," Doug Scovanner, Target's chief financial officer, told analysts last week. "There are too many variables right now for us to be able to make that prediction without misleading you."
But whether it's meat or milk, cereal or celery, the direction seems clear: up.
Distributed by McClatchy-Tribune Information Services.
