Food inflation © Randy Faris/Corbis

Extra5/23/2008 12:01 PM ET

Burned at the BBQ: Cookout costs soar

Food inflation has spiked to its highest in almost 20 years, just in time for the unofficial start of summer. And it's hitting Americans right in the backyard grill.

By The Associated Press

Hamburgers and hot dogs? Check. Lighter fluid? Check. Beer? Check. More money?

Americans are about to fire up their barbecues for the start of the summer cookout season, and one thing has become painfully apparent: It's going to cost a lot more than it did last year to roast a burger, or just about any other barbecue favorite, on the grill.

Food inflation is the highest in almost two decades, driven by record prices for oil, gas and mounting global demand for staples such as wheat and corn, and for proteins such as chicken. And that's reaching into Americans' backyards.

The price of an average barbecue -- with burgers, hot dogs, beer, soda, condiments, salad, paper plates and lighter fluid -- could run families about 6% more than last year.

That's making shoppers pause as they fill their carts for the Memorial Day weekend, the unofficial start of the barbecue season.

"I'm finding myself questioning every purchase, wondering if it's gonna get eaten or if we really need it," said Tony Caballero, an advertising and marketing consultant, as he filled his cart with paper plates at a Food Emporium in New York City. "When you do your everyday shopping, you try to cut corners. But it's a shame to have to scale down when you're trying to throw a party."

Blame bad weather, biofuels

The Consumer Price Index for food rose 4% last year, compared with an average 2.5% annual rise for the last 15 years. On May 19, the U.S. Department of Agriculture raised its forecast for next year by half a percentage point, to a range of 4.5% to 5.5%.

Basic economics account for most of the increase: Bad weather has hurt crops, economic prosperity has driven up demand in developing countries and surging fuel prices have raised transportation costs.

Economists and food scientists have argued that biofuel production is also a major factor in rising food costs, particularly corn, and that it should be scaled back. Meat and poultry executives have come out against federal ethanol mandates, which they say are driving the cost of corn higher.

Carol Tucker-Foreman, food policy expert at the Consumer Federation of America, said high-fructose corn syrup can be found in just about anything you'd find at a cookout or picnic.

"The backyard barbecue is where you'll see the most impact from the government's decision to subsidize the use of food to put fuel in our cars," she said. "From the ketchup to the paper plates, these are the things that are going to cost you a lot more than they used to. And this is just the beginning. Next year, it'll be even more expensive just to stay home and make burgers."

This year, the price for a pack of hot dogs has climbed almost 7% to $4.29. A 2-liter bottle of soda and a 16-ounce bag of potato chips both jumped more than 10%, to $1.33 and $3.89, respectively, while a package of eight hamburger buns costs $1.61, 17% more than last year.

Prices for barbecue fixings
Cookout favorites2008 price2007 price1-year change

One pound of ground beef

$3.52

$3.48

1.1%

Package of eight hot dogs

$4.29

$4.02

6.7%

Eight hamburger buns

$1.61

$1.38

16.7%

Eight hot dog buns

$1.89

$1.65

14.5%

One pound of American cheese

$3.88

$3.73

4.0%

One pound of tomatoes

$1.77

$1.63

8.6%

One pound of lettuce

99 cents

90 cents

9.1%

One-pound bag of chips

$3.89

$3.48

11.8%

Six-pack of beer

$6.74

$6.66

1.2%

Sources: Consumer Price Index, Home Depot, 7-Eleven, National Cattlemen's Beef Association

The surge in prices is forcing people to try to cut corners and find bargains where they can, such as buying store brands, which tend to cost less than name brands.

'One of the pleasures in life'

A recent study by the Food Marketing Institute found that about a third more shoppers are limiting themselves to frozen or boxed foods instead of fresh items this year, while nearly half said they bought fewer foods overall.

But 55-year-old Cherise Tilly, who lives with her mother in Cincinnati, said she still buys more expensive items like steak, ribs or chicken for grilling along with relatively cheaper meats like hamburgers and hot dogs.

"My mother keeps worrying and says we need to cut back more, but getting together with friends to eat is one of the pleasures in life," Tilly said while shopping at a suburban Cincinnati Kroger store.

Other shoppers may be more reluctant to indulge, and those paying close attention to prices in the aisles may worry they're being gouged by grocers, said National Retail Federation spokesman Scott Krugman.

"Consumers don't care why prices are increasing, they just want something to be done about it," Krugman said. "What they don't realize is how razor-thin profit margins are in terms of price increases on grocers as well."

Video on MSN Money

feed prices on the rise © MSN Money
Don't bank on relief from higher food prices
The government's 2008 forecast of a 4% rise in the food component of the Consumer Price Index is overly optimistic, says MSN Money's Jim Jubak, who explains why.
While beef prices have been high, chicken and pork prices are expected to rise as producers are feeling the brunt of higher costs for feed and fuel.

Scott Faber, a lobbyist for the Grocery Manufacturers Association, which has been pushing Congress to increase ethanol research funding, said prices for meat will continue to rise in the next couple of years. Newly enacted federal ethanol mandates will drive the cost of corn higher, he said.

"We are just in the beginning of a period of significantly higher prices, and American families will continue to feel that impact as the cost for basic staples like milk, meat and eggs will grow dramatically," Faber said. "This holiday weekend surely reflects that."

This article was reported and written by Erin Conroy for The Associated Press.

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