Feb. food price hikes biggest in 36 years

Wholesale food prices spiked last month as storms damaged crops in Florida and Mexico, leading to the biggest gain in costs since 1974.

The federal Labor Department said Wednesday that food prices rose 3.9 percent last month, up from January's 0.3 percent. Prices had risen 0.5 percent a year earlier.

About 70 percent of last month's increase was blamed on vegetables, where supplies were pinched by bad weather. Grocers and economists said shoppers have likely already seen the impact of rising wholesale prices in store aisles.

"It depends on the product, but with some perishables consumers would see higher prices almost immediately," said Thomas Conoscenti, an independent economist based in Nesconset.

Citing the slim profit margins for supermarkets, Conoscenti and others said retailers had little choice but to pass along their higher costs for food purchases to shoppers. Stores "really cannot absorb it, and they won't," he said.

At the Shop & Shop chain, which has many outlets on Long Island, prices for tomatoes, cucumbers and other vegetables have risen because of crop damage caused by freezing temperatures in the South. "We were impacted immediately," said Arlene Putterman, a spokeswoman for New York-area stores.

She also said consumers can offset higher prices, in part by purchasing large quantities and using the chain's savings card.

A spokesman for King Kullen Grocery Co., based in Bethpage, declined to comment. The Great Atlantic & Pacific Tea Co., operator of Waldbaum's, Pathmark and A&P stores, didn't respond to a request for comment.

Food and gasoline prices led to a higher-than-expected rise in the overall Producer Price Index, one of three monthly indicators of inflation. The PPI jumped 1.6 percent last month after rising 0.8 percent in January. The index had fallen 0.4 percent a year earlier.

Economists doubted February's PPI would cause the Federal Reserve Bank to change interest rates, which are hovering around zero percent. The central bank excludes food and energy prices from its calculation because of their volatility, said Pearl Kamer, chief economist at the Long Island Association business group.

She and others said they would study this morning's release of the Consumer Price Index for signs that wholesale-price increases are filtering down to shoppers. "Freezing temperatures in the Gulf of Mexico and higher transportation costs because of oil prices translate into higher prices for vegetables and fruit," Kamer said.

Ryan Wang, an economist at HSBC Securities USA, predicted food costs "should continue to trend higher well into the second half" of this year.