Food Prices

Wholesale food prices took their biggest leap in more than six years in June, the Labor Department reported Friday, with higher charges for fruits, milk and red meat presaging sticker shock for grocery shoppers nationwide. After three years of relatively mild food price inflation, severe drought in farm country and heavy overseas demand for U.S. grain are beginning to take their toll.

Tens of thousands of Solidarity supporters went on strike for an hour in the Baltic region of Gdansk on Friday in Poland's biggest protest yet against food price increases imposed by the Communist authorities. Up to 80,000 Solidarity members and thousands of other Poles stopped work in the region's shipyards and factories and draped their gates and walls with Solidarity flags in Poland's red and white national colors, a union spokesman said.

Tens of thousands of Liberians enraged by rising food prices looted shops and stoned police, paralyzing Monrovia, a capital city already battered by civil war. There were no immediate reports of deaths or serious injuries.

Rising food prices propelled by the drought in America's farm belt are unlikely to cause any long-term inflation, Reagan Administration officials said today. In separate statements, Treasury Secretary James A. Baker III and economics adviser Beryl W. Sprinkel downplayed the impact of the worsening drought on the U.S. inflation rate. The drought threatens to cut significantly into this year's harvest of wheat, corn, soybeans and a host of other food crops.

Food prices, which have risen sharply in the past two years, will stabilize somewhat in 1991, according to a federal agriculture economist's forecast. The projection is surprising because it comes at a time of oil market uncertainty, reduced red meat production and recent weather damage to California's produce industry. The cost of food, calculated by the government as including meals eaten at home and in restaurants, rose at an annual rate of 5.8% each in 1989 and 1990.

U.S. consumers can expect their grocery bills to rise a negligible 2.2% to 3.2% this year, thanks to intense industry competition that should keep food prices in check for the rest of the decade, the U.S. Department of Agriculture said Thursday. Consumers will get a break with cheaper steaks, beef roasts and hamburger this year, said Ephraim Leibtag, the USDA's food inflation expert. Beef prices are likely to drop by an average 3% to 4% in 2004 as a result of the first U.S.

After a spate of flood, freeze and drought that drove food prices sky high earlier this year, U.S. consumers are finally getting a break in the grocery store. A dramatic slide in food prices that began in July is expected to last into September, analysts said Friday, giving shoppers a much-needed rebate. The damage wrought by bad weather this spring has been repaired by more favorable conditions. Agricultural analysts said good weather across the country was largely responsible for the 0.

Food prices in the Iraqi capital plummeted Saturday and the dinar soared against the U.S. dollar as news spread of Baghdad's decision to discuss U.N. terms for limited oil sales to pay for urgently needed food and medicines. Money traders said that this week had been the hardest period for business since U.N. sanctions were clamped on Iraq for invading Kuwait in 1990. "We just do not know what is happening. For the first time, I cannot read between the lines," one trader in Baghdad said.

With high food prices prompting grocery-store apologies to customers and raising fears of starvation in impoverished countries, Congress suddenly faces renewed pressure to cut subsidies to the wealthiest farmers and incentives for ethanol production. The American farmer, long an untouchable political icon, has even become something of a political embarrassment on Capitol Hill, with President Bush earlier this week demanding an end to crop subsidies for "multimillionaire farmers."

Despite last year's Midwest drought, which appears to be entering its third year in many areas, the effect on food prices appears to have been minimal, according to the Agriculture Department . For all of 1988, retail food prices--a key element of the consumer price index--rose 4.1%, the same as in 1987. In Los Angeles, the rise was even less, 3.4%.