Food Price Rises Reach Retail Level

Posted at 10:45 AM (CST) by & filed under Trader Dan Norcini.

Dear Friends;

This morning, the Dow Jones news wire carried a story from the Wall Street Journal dealing with the rise in food prices. We have been repeatedly warning about this for some time now as the futures markets reflect the cost at the wholesale level. It was just a matter of time before the inevitable price rise hit at the retail level. Here is a short excerpt from that story:

Food Sellers Grit Teeth, Raise Prices

From THE WALL STREET JOURNAL – An inflationary tide is beginning to ripple through America’s supermarkets and restaurants, threatening to end the tamest year of food pricing in nearly two decades. Prices of staples including milk, beef, coffee, cocoa and sugar have risen sharply in recent months. And food makers and retailers including McDonald’s Corp., Kellogg Co. and Kroger Co. have begun to signal that they will try to make consumers shoulder more of the higher costs for ingredients.

Note also the sharp move higher in the CCI as it continues moving towards its 2008 peak. This is significant because it took crude oil prices above $140 to drive the CCI to over the 600 level back then. Today crude is trading below $90 and yet the index is within striking distance of that all time high. The food component of this index, along with the metals, is driving it higher. Crude oil is attempting an upside breakout which if it accomplishes a push through $87, will easily take the index into a new all time high.

Translation – the meltdown in the US Dollar, thanks to the Fed’s lunacy, is going to strongly impact disposable income as consumers will be forced to pay higher prices for the essentials of food and energy. Fed governor Hoenig, will be the one vindicated by history as we observe firsthand the legacy of nearly unlimited money printing.

Click chart to enlarge in PDF format with commentary from Trader Dan Norcini