If it seems like certain food prices have been inching up, it's not just your imagination. Sugar, beef, pork, and coffee prices have been soaring in international markets and that's beginning to show up in the grocery stores here in Central Indiana.
The Labor Department announced Wednesday that the Producer Price Index jumped 0.8% last month. While food prices across the board moved up only 0.3%, certain types of food are seeing steep price hikes.
"Pork chops, higher, steak's higher, roast higher. All meat, even bacon," Wilola Sheffield said while shopping at a Northwest Indianapolis grocery store.
Prices for corn and wheat have all climbed on international markets and that's made it more expensive to bring livestock to market, so those prices have jumped. Even sugar prices have soared, though it's been tough to tell unless you're really paying attention.
"I noticed the sugar has gone down to the same price, smaller bags. Instead of 5 pound, you've got 4-pound," said Ron Stele.
"For the last 2 years, we've seen prices drop. We've seen a bit of deflation and now we're seeing that turn around," said Matt Will.
Will teaches Finance at the University of Indianapolis. He explained that producers and manufacturers of all sorts of goods including food, clothing and consumer goods have been reluctant to raise prices because of the poor economy, but that may change soon.
"Whenever you hear cotton's up, copper's up, the manufacturer is being squeezed. Profits are shrinking and that's not going to last forever. Eventually, they'll pass that along," he said.
Those commodities and more are on the rise. That includes cotton, polyester, copper, steel, iron, and food stuffs like corn, sugar, wheat, beef, pork, and coffee. You may not see big price increases in many of your favorite foods that depend on those though. Take cereal for instance, even though it's made from corn and wheat that's only a small part of the cost.
”A lot of it's the packaging, transportation, overhead. So when you hear prices are going up to manufacturers of up to 50%, that's not all passed along to us because they have other costs that are more stable," Will said.
Overall, the Producer Price Index shows these inflation numbers are in line with historic norms. Economists say it's actually good to have some inflation, because it encourages people to buy things when they know those items may go up in price over time...and right now, more people spending money is just what the economy needs.