DeMarrais: Higher food prices on the way

Drought conditions persist in Uganda, and the Starbucks in Paramus ups the price of a latte by 20 cents.

Frost hits near the Caspian Sea in Russia, and a Hackensack grocer raises the price of a box of raisin bran by 20 cents.

Sound far-fetched?

Wholesale prices

Wheat (per bushel)

3/15/10: $4.79

3/15/11: $6.68

% change: 39.5

Corn (per bushel)

3/15/10: $3.63

3/15/11: $6.36

% change: 75.2

Coffee (per 100 lbs.)

3/15/10: $131.05

3/15/11: $262.95

% change: 100.6

Sugar (per 100 lbs.)

3/15/10: $19.39

3/15/11: $25.65

% change: 32.3

Orange juice (per 100 lbs.)

3/15/10: $151.65

3/15/11: $167.20

% change: 10.3

Cattle (per 100 lbs.)

3/15/10: $95.65

3/15/11: $113.50

% change: 18.7

Sources: CME Group Inc.; IntercontinentalExchange

Well it shouldn't. These examples are exaggerated — the cause and effect are not that direct — but they do reflect what is happening in supermarkets, food stores and restaurants across North Jersey.

Supply problems thousands of miles away, along with a growth in demand by middle-class consumers in China and India, are leading to double-digit increases in the wholesale price of many foods, and that is leading to higher retail prices.

"Everything is tied together," said Brian Todd, president of The Food Institute in Upper Saddle River. Increased demand in one place means fewer supplies in others, "and that means higher prices."

Consumers have thus far seen only a hint of what's to come.

Last week the Bureau of Labor Statistics reported that its food-at- home index — the part of the Consumer Price Index that measures supermarket prices — rose by 0.8 percent in February, its biggest monthly gain since September 2008.

Increases were reported in nearly all food groups, including fruits and vegetables (up 2.2 percent) and meat, poultry, fish and eggs (up 1.2)

Over the past year, the CPI's food-at-home index is up a modest 2.8 percent, with some of those increases hidden on shrinking package sizes for a variety of products, including coffee, sugar, cereal and orange juice.

But the Producer Price Index, which tracks costs in getting products to market, was up 3.9 percent last month for "finished" consumer foods (those ready for the supermarket shelf) — the biggest monthly gain since November 1974. Also, the index of crude foodstuffs and feedstuffs, a category that includes wheat, corn, soybeans, sugar, meat and poultry, rose 29 percent in the past year.

That's why, despite efforts by business owners to eat or at least limit any increases, the upward trend at retail is likely to continue.

The latest government forecast predicts retail price increases of up to 4 percent this year, Todd said.

"I think most merchants have been absorbing the costs, cutting back where we can," said Domenic Scalia, manager of Corrado's market in Clifton. "No one wants to be the first one to raise prices."

Competition has a lot to do with it, said Ed Doherty, whose Allendale-based company, Doherty Enterprises Inc., owns 93 restaurants in New Jersey and New York, including 60 Applebee's and 26 Panera Bread cafés.

"Restaurants, in addition to competing against restaurants, also compete against supermarkets," he said. "We're competing for the same share of stomach."

"Supermarkets tend to raise prices quicker, and that puts us in a little advantage as long as I can hold off," he said.

To maintain that edge, "you try to reduce costs in other areas, tighten the hours, cut off utilities earlier, try to do every little thing to save," he said.