Global coffee prices have doubled in the last 12 months. Starbucks and Peets raised their prices last fall and will most likely do so again in the near future. Global warming is more than likely what has led to different weather patterns. These new patterns have created a new paradigm where crops in Kenya and Colombia are damaged. The standard of living has increased in China and India, driving up demand for the coffee of the middle class.
The cost of beef has increased tremendously. Grocery prices have increased more than 1 1/2 times the 2010 inflation rate. Economists predict this increase will be a lot more in 2011. Restaurant goers can expect to see an 8% increase in the cost of going out for meals in 2011. Many chains will not be able to keep up since they operate on slim profit margins anyhow. Fuddruckers filed bankruptcy last year and Sbarro is expected to this year. Many more are right behind them. In California Restaurant owners have been hit with healthcare taxes, payroll taxes going up, sick-leave pay, and increasing minimum wages. The only place to squeeze is to increase prices and cut portion sizes. Will customers go for it?
Corn is used for ethanol and demand is up, so feed costs for farmers is going up. This cost gets passed on to the wholesale and retail markets. The soybean crop last year was less than expected and 20% of the Russian wheat crop was destroyed by drought and fire, another byproduct of global warming. Beef prices are up 20% in the last 12 months as well.
Food, coffee and gas prices will go up. Unemployment is still about the same and wages will not go up anytime soon. Government budgets are way out of whack.
Our period of denial is getting close to being over. We will soon realize the world is different and a new paradigm is here.