Food Price Red Herring
Corn ethanol production has had almost no impact on the consumer price index (CPI) for food, according to an authoritative new report.
Two factors stand out as the real drivers of consumers’ food bills. The first is the 81 percent of retail food costs that are tied to marketing expenses — everything from transportation and energy costs to labor, to advertising. The second is the much broader effect of a growing global economy, which has triggered increased demand for commodities of all sorts.
Sorry to take a red herring away from ethanol’s opponents. But facts are facts.
Sources:
Informa Economics, “Analysis of Potential Causes of Consumer Food Price Inflation,” November 2007.
“Corn Ethanol Not Culprit for Food Inflation,” by Christine Stebbins, Reuters, December 10, 2007.
