Effect Of Rising Food Costs Will Be Moderate For Consumers, According to The Food Institute

While food manufacturers and distributors have been facing huge cost increases, the impact on consumers will be moderate in 2006, according to experts speaking at The Food Institute’s first annual outlook seminar Input Costs to Consumer Pricing, What’s Ahead in 2006? Large food makers like Kraft, Hershey, Flower’s Foods and others have already announced price increases (most in the range of 3% to 5%) for many of the products they sell to retailers, as a result of the substantial double-digit packaging, fuel and energy costs faced by the manufacturers. The impact of the increases to consumers is expected to be a 2.5% to 3.5% increase in the Consumer Price Index (CPI) in 2006, according to USDA economist Ephraim Leibtag.

Most of the increases are expected to hit consumers in the first half of 2006, noted Leibtag. If 2006 food inflation reaches the high end of the estimate, it will be just slightly higher than increases experienced in 2004, 2001 and 1996.

Looking back even further, food price inflation this decade is expected to be much more moderate than it was in the 1980s or 1970s. The average annual change in food price inflation in the 80′s was 4.6%, while in the 70′s it was 8.1%

Leibtag noted that the stabilizing forces for consumer food prices are:

— Better Inventory Management/Cost Saving Technologies

— Globalized Trade: Year-round availability

— Increased Competition from nontraditional retail formats.

— Food-away-from home continues as an upward trend in share of food bill.

— Increased demand by consumers for convenience, quality, and low prices.

Attention Editors

Additional coverage of this Food Institute seminar can be found at: http://www.foodinstitute.com/pressreleases.cfm#wahead

Bios of each of the speakers and PDF files of each of the presentations are available at: http://www.foodinstitute.com/whatsaheadslides.cfm . As a result of the success of this seminar, The Food Institute plans to make this outlook format seminar an annual event. Look for news about What’s Ahead for 2007? starting in the summer of 2006.

About The Food Institute

The Food Institute strives to be the best “single source” for current, timely and relevant information about the food industry from “farm to fork.” The association serves as a trusted source of information, providing balanced coverage of the issues. It delivers information through multiple media so that industry professionals worldwide can tap in when and how they choose.