World Bank: Food Prices at 'Dangerous Levels'

The price of wheat is up 67 percent in a year, says World Bank.

Feb. 15, 2011 -- Americans shopping for staples like groceries and clothing this spring are in for a wake-up call at the register – at stores across the country, prices are going up because of events half a world away.

The wild weather around the globe has had a far-reaching impact, with droughts and flooding damaging crops and reducing crucial supplies of commodities.

"We've had extremely strange weather patterns the world over where many crops have been destroyed," said Diane Swonk, Chief Economist at Mesirow Financial. "We've actually seen a hit to the supply of food available."

The World Bank warns global food prices have now hit "dangerous levels."

Food prices are up a staggering 29 percent worldwide. A heat wave in Russia and near-Biblical floods in Australia have sent wheat prices soaring 67 percent over last year. And here in the United States, floods followed by droughts in the Midwest mean corn prices jumped nearly 60 percent in a year.

What does this mean for trips to the grocery store? Not just higher prices for things like breakfast cereals. Higher corn prices also drive up the cost of pork, beef, and poultry because farmers use corn for livestock feed. Buying spare ribs to grill for dinner could add 10 more dollars to your grocery bill.

Other commodities are up too -- bad weather in the world's coffee-producing nations has pushed the price of coffee beans to a 13-year high.

"You have to look for bargains, which brand is cheaper," one consumer told ABC News. "Sometimes you have to compromise the taste for the price."

The weather isn't just affecting necessities we eat: the cost of cotton is now at a 15-year high. As the price-per-pound ticks upward, so does the cost of your spring wardrobe.

The cost of your average T-shirt is liable to increase by $2, while a pair of Levi's 501 jeans is expected to jump as much as $4. The price increase will show both for luxuries and necessities. Hanes underwear could rise as much as 30 percent; a Brooks Brothers dress shirt is already up $9.

Food Prices Rise After Droughts and Floods

Devastating droughts in China and flooding in Pakistan are in part behind the cotton price hike. A year ago, raw cotton cost 55 cents a pound. Today, it's $1.80 -- more than three times the price.

Retail analysts say, even though world-wide supplies are down for all sorts of raw materials, demand is high because there are now so many consumers in China. That means prices are unlikely to drop anytime soon.

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