Food, fuel costs climb, and key inflation measure drops

Federal government traditionally pays little heed to food, energy prices when considering inflation, but that might change

In more than 20 years of selling pinto beans and long-grain rice, canned chiles and Mexican salsa, David Steinbarth has never had to jack up prices like this before.

“We’ve had to move prices three, four, five times in the last six months,” said Steinbarth, a veteran executive at La Preferida, a family-owned foodmaker in Chicago. “We’re just trying to cope like everybody else.”


With Americans paying $60 to fill up the car and trading down to burgers instead of steaks, practically everyone is feeling the impact of rising food and energy costs. Soaring prices have put biofuel production under scrutiny, complicated farm bill negotiations in Congress and provoked food riots across the globe. In urging emergency action last week, United Nations Secretary General Ban Ki Moon warned of “widespread hunger, malnutrition and social unrest on an unprecedented scale.”

Yet for all those profound concerns, the government reported last week a net drop in the measure of inflation most closely watched by the Federal Reserve, leaving people to wonder how that number can be falling when everything from a tank of gas to hamburger meat is sky-high. In fact, the official view of inflation for years has taken little account of food and energy prices, which are thought to go up and down with no lasting impact.

But evidence is growing that these basics could be elevated for years to come, and the “core” inflation rate