Saturday, June 23, 2007

Pizza Inflation

Soaring cost of cheese and other items forces pizza makers to raise prices. Expect more of this. Because so far, we ain't seen nothing yet in terms of food price inflation. Food commodities have risen 28.4% the latest year (6.7% the latest month). Yet food price inflation in the PPI have risen just 8.6%
the latest year and in the CPI a mere 3.9%. This is in part due to the fact that the cost of other input have risen less and in part likely because competitive pressure have made food stores and restaurants reluctant to raise prices in response to what they believe could be just temporary cost increases. However, as the latter factor implies reduced margins it is likely unsustainable so food price increases at the retail level is likely to increase, and not just in the case of pizzas.


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