NEW YORK – Breakfast is now being served with a side of sticker shock.
The price of bacon is surging, and the cost of coffee and orange juice is expected to rise because of global supply problems ranging from drought in Brazil to disease on U.S. pig farms.
And it’s not just the first meal of the day that’s being affected. The cost of meats, fish and eggs led the biggest increase in U.S. food prices in nearly 2 1/2 years last month, according to government data. An index that tracks those foods rose 1.2 percent in February and has climbed 4 percent in the past 12 months.
While overall inflation remains low, the increases in food prices are forcing consumers to cut back and shop for deals.
Denise Gauthier, 54, a screenwriter in North Hollywood, Calif., calls the rising prices shocking and outrageous. To cope, she has become more frugal, hunting for discounts and buying less food overall.
I will look for things that are on sale and adjust my menu for that, says Gunthier, who now stocks up on her favorite coffee when it goes on sale for $4.99.
Even though food companies use a range of cost-cutting methods to limit the effect of higher food costs, consumers will likely feel the ripple effects of rising commodity prices, according to the Grocery Manufacturers Association, a trade organization for more than 300 food, beverage and consumer product companies.
Here’s a rundown of why breakfast food costs are rising – and why they could keep going up.
Bringing home the bacon is costing more.
The price of lean pork in the futures market is at record levels, $1.31 a pound, a 52 percent increase since the start of the year. Traders are concerned about a deadly virus in the U.S. hog population.
That could further boost bacon prices, which were already rising after farmers cut pig production because a drought in 2012 forced up the cost of feed.
The average price of a pound of sliced bacon in U.S. cities was $5.46 in February, up from $4.83 a year earlier and $3.62 five years ago, government data show.
The retail price of pork is projected to climb by 2.5 percent to 3 percent this year, according to government forecasts.
You need your morning brew, and you’ll likely pay more for it at the supermarket.
Coffee futures have surged 57 percent this year and this month rose above $2 a pound for the first time in two years. Coffee-growing regions of southern Brazil, the world’s largest coffee producer, have been hit by drought. Analysts are forecasting that Brazil’s crop could shrink by about 20 percent this year.
Shoppers should be prepared to pay more at grocery stores if the trend continues for more than a month, says Dan Cox of Coffee Analysts, a company that tests coffee quality for retailers.
Say squeeze when you pass the OJ.
Orange juice futures are up 12 percent this year and climbed as high as $1.57 a pound March 6, their highest price in two years.
To be sure, moves in retail food prices won’t match the wild jumps in commodities markets, says David Garfield, a consultant at AlixPartners who advises food-makers. The reason: Food companies worry about losing market share and will absorb some of the higher costs rather than risk losing customers.
People would be up in arms if every time they went to the grocery store, the prices of their preferred items were jumping up and down, Garfield says.
The price of a 12-ounce can of frozen orange juice edged up in February to $2.43 from $2.41 in January, government data say.