Up, up, and away

March 25, 2011

Whether it is corn, cocoa, sugar or wheat, food inflation is increasingly important global problem and relief is not expected anytime soon, reports TheStreet.

Whether it is corn, cocoa, sugar or wheat, food inflation is increasingly important global problem and relief is not expected anytime soon, reports TheStreet.

The United Nation's Food and Agriculture Organization (FAO) said its index of global food prices was at record highs, up 25 percent internationally in 2010, higher even than where the index was in 2007-8 during the last food price inflation crisis. In addition, volatility in oil markets could send food prices even higher.

Rising ingredient prices are eating into bottom lines of food stocks including Hershey, Kraft Foods, McDonald's, Starbucks, ConAgra Foods, and General Mills. Rising costs have already forced Kellogg Co., Panera, and Sara Lee to raise prices.

The quick rise in food inflation started around seven months ago, Nicholas Colas, ConvergEx Group's chief market strategist, told TheStreet, building off long-term trends like the growing middle class in China and India where demand for beef and vegetable-based proteins grew disproportionately to demand for grain-based diets.

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