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Study: Consumer Food Costs Rising, Reversing 55-Year Trend

CARMEL, Ind. — Food costs for a family of four increased more than $2,000 above expectations in 2012, according to a recent study by FarmEcon, an agricultural and food industry consultancy.

Using data from the U.S. Department of Commerce, “Food Costs Are Eating American Family Budgets” found the trend of steadily cheaper food since World War II has reversed in recent years. While food prices gradually decreased from 1950 to 2005, costs for consumers went up each year starting in 2006.

In 2012, the average food costs for a family of four were $2,055 higher than the previous trend line. For the average person it was $514 higher.

Read more: Consumers Snack Most on Fruit Says NPD Report

As a whole, that represents an additional $162 billion spent on food last year, the study found.

“That spending diversion has contributed to the slow rate of improvement in unemployment, job creation, and thus total U.S. income. In short, increased food costs have decreased discretionary spending, robbing other sectors of sales needed to increase production and jobs,” FarmEcon president Thomas Elam wrote in the report.

The study cites expanded use of corn for ethanol as the biggest factor in food price increases, while high fuel costs also played a role.

Consumer food costs are also expected to rise in 2013 and 2014 as high commodity prices continue to trickle down the supply chain.

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