Business

Food, gas costs push consumer prices higher

Posted April 15, 2011

— Americans paid more for food and gas last month, but outside those volatile categories, inflation remained tame.

Consumers are spending more, but the steep increase in food and gas prices could limit their ability to purchase discretionary goods and services.

On Friday, drivers paid an average price of $3.75 a gallon in North Carolina, lower than the national average of $3.815 a gallon, according to the travel group AAA.

Raleigh gas prices were at an average of $3.74 a gallon, Fayetteville at $3.78 and Wilmington at $3.76.

Gasoline prices jumped 5.6 percent last month and have risen nearly 28 percent in the past year. Last April, North Carolinians were paying $2.80 for a gallon of gas.

Food prices rose 0.8 percent last month, the largest increase in almost three years. Prices for fruits and vegetables, dairy products, chicken and beef all increased. Coffee costs rose 3.5 percent.

Manufacturers, food processors and other producers are facing higher costs for oil, grains and other commodities. But only some of those increases are reaching the consumer. Many retailers are reluctant to pass on the higher prices for fear of losing price-conscious customers.

Consumers have seen wages and salaries stagnate in the past year, limiting their ability to pay more for many goods. According to a separate government report Friday, average hourly earnings for all employees, adjusted for inflation, dropped 1 percent in the past 12 months.

Stagnant wages are a big reason that most Federal Reserve policymakers say the spike in gas and food will have only a modest and temporary impact on inflation.

"Nothing here to change the Fed's view that the surge in commodity prices can be ignored as long as it doesn't lead to second-round effects in wages and core inflation," said Paul Ashworth, chief U.S. economist at Capital Economics.

Still, pricier food and gas means consumers have less money to spend elsewhere. Consumer spending makes up 70 percent of economic activity. Rising inflation has caused many analysts to reduce their estimates for economic growth in the January-March quarter from roughly 3 percent or higher to as low as 1.5 percent.

The Consumer Price Index rose 0.5 percent in March, the Labor Department said Friday. That matched February's increase, the largest since the recession ended in June 2009. In the past 12 months, the index has increased 2.7 percent, the biggest rise since December 2009.

Excluding the volatile food and gas categories, the so-called core index rose 0.1 percent and it is up only 1.2 percent in the past year.

Separately, the Federal Reserve said U.S. factories produced more consumer goods, business equipment and raw materials in March, boosting manufacturing activity for the ninth straight month. Overall industrial production increased 0.8 percent.

Factory production, the largest single segment of industrial production, increased 0.7 percent last month. Manufacturing has been a key driver of economic growth since the recession ended. That continued last month, even with supply chain disruptions stemming from the crisis in Japan.

52 Comments

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  • bacchianm Apr 15, 5:24 p.m.

    Me to.. and it is normally the people in front of me at the grocery store - over weight and eating steaks with a Food Stamp card. letssee"

    Of course it is! I guess you stand right on top of them when they are swiping their card through the same machine you swipe your debit card through, huh? Otherwise, how would you know what they're paying with? Yet another untruth being perpetuated by the ignorant.
    rescuefan

    I know what an ebt card looks like and when they have to seperate their groceries to what they cant buy with an ebt and what they can buy with an ebt is another big hint. If they appear destitute it doesnt bother me, but when they are buying better food than I can afford and wearing expensive jewelry, now I draw the line on that. Get over yourself "rescuefan".

  • Rebelyell55 Apr 15, 4:48 p.m.

    Just saw the report on CNN where Pres. said the tax cut he gave us should help us pay for our gas.LOL. or cry a river, don't know which one. Most didn't get the tax cut. I guess this govements way keep oil exc. happy. "Raise the price of gas", we'll give em a tax cut to pay it" ya'll happy now.

  • ObamaMustGo aka NCcarguy Apr 15, 2:30 p.m.

    $120 to fill up my truck today...whew!!! That's getting tough to do.

  • rescuefan Apr 15, 2:24 p.m.

    "Me to.. and it is normally the people in front of me at the grocery store - over weight and eating steaks with a Food Stamp card.
    letssee"

    Of course it is! I guess you stand right on top of them when they are swiping their card through the same machine you swipe your debit card through, huh? Otherwise, how would you know what they're paying with? Yet another untruth being perpetuated by the ignorant.

  • Boot-the-DC-Tyrant Apr 15, 2:21 p.m.

    I buy everything generic now. I refuse to pay for someone's advertisements anymore.

  • working for deadbeats Apr 15, 2:14 p.m.

    This is Obama's dream for America. He and his marxist friends want all of us to be poor and begging them for help. Vote for more of this in 2012. Woohoo..love the change!

  • GWALLY Apr 15, 1:49 p.m.

    "Consumers have seen wages and salaries stagnate in the past year"

    Ya THINK...? Vote for MORE of this hope and change in 2012.. ;)

  • GWALLY Apr 15, 1:47 p.m.

    More hope and change...!!! :

  • jaydosse Apr 15, 1:46 p.m.

    I hope someone didn't pay a think tank to figure this one out.
    What a worthless news story this is!!

  • edgar709 Apr 15, 1:39 p.m.

    "Consumers have seen wages and salaries stagnate in the past year"

    Really? It's more like THREE years for me!!!!

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