What is happening in the cattle market is directly affecting food prices at your local supermarket. Here are some upsetting numbers.
- Global meat prices have hit a 20-year high.
- The UN Food & Agriculture Organization's index was the highest in August since 1990.
- Live cattle futures hit $1 per pound, the highest in 22 months.
- Australian lamb prices have risen above $5.50 a kilo, the highest since 1973-74.
- And this is the big whopper: Pork bellies, which are used for bacon, are at a record $1.50 per pound.
- The higher cost of feed is driving up prices.
Demand for a more protein diet is coming from countries like China and Brazil. Increased demand is creating higher prices and food inflation.
Of course none of this increase will be reflected in government figures. The government conveniently omits food and energy from its core inflation index. The reason for this is simple. Social Security payments are tied to the cost of living. So to keep Social Security payments low for retired Americans, the government decided to invent a new index, namely the core index, and omit food and energy.
So now, finally, Ben Bernanke has what he has been praying for: more inflation. And the inflation will be hidden in the government's core index. So now the Fed can be happy and content.
Unfortunately, Americans will be paying higher prices for meat products.