Brace yourself: Prices are rising. Everything from cereal to meat and jeans to jewelry is likely to cost more this year because of higher prices for raw materials such as corn, wheat and cotton.
The United Nations Food and Agriculture Organization reported that in January, global food prices were the highest since the organization began collecting data in 1990. While prices for cereal, oils/fats and sugar reflected increases in January, they remained below peak prices.
High global food prices mean price increases for imports, a trend reflected in the monthly import price indexes from the U.S. Department of Labor Bureau of Labor Statistics. Meats, edible fruits, coffee, tea, spices and cocoa all went up in January.
The price of cotton, a U.S. export, more than doubled over the past yearand that could mean apparel will cost more.
What's driving the price increases? In a word, weather.
Poor weather cut crops in the U.S., China, Russia and other countries. When limited supply meets with higher demand, the price goes up.
It's not clear how much of the increase consumers will shoulder.
"Sometimes businesses will eat price increases for a while until they want to pass it on to consumers," said Robert Sutton, economist in International Price Program at Bureau of Labor Statistics. "Then prices get to a point when they have to pass it down."
Many retailers appear to be reaching that point, even retail giant Wal-Mart.
“There’s no doubt there may be some price increases that come up, but we don’t want to ever let that be the first answer ... that just because cotton prices are up, that we’re automatically going to pass that on to consumers,” Mike Duke, Wal-Mart’s CEO and president, said in a recent interview.
Last fall, a number of retailers including Starbucks and Kroger said they would pass on supplier increases to consumers and manufacturers such as General Mills and Kraft Foods indicated they would raise some prices.
While there isn't much consumers can do to escape the price increases, there are some steps they can take to prepare. Those include creating a budget for food and non-food items and setting aside money in advance to make those purchases; clipping -- and actually remembering to use -- coupons, and buying generic instead of brand-name goods.
The Associated Press contributed to this report.
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