The average (mean) price of gasoline in New Jersey has risen 22.8% from one year ago. The average price per gallon in March 2010 was $2.62 versus $3.39 on Friday March 11th. There are rumblings of crude going to $130 – $140 per barrel and gas reaching $4.50 p/gallon by Summer, which could be a major tipping point for the economy.
This sharp spike in gas prices, along with an approximate 13% rise in aggregate food prices from the fourth quarter of 2010, signals trouble ahead. There will be a meaningful negative impact on the economies, both on a macro and micro level, but more-so on a micro level, especially for the middle and lower income working classes.
Global and domestic shortages in corn, soybeans and wheat have pushed prices to their highest levels this decade. Oil prices are also affecting food prices, as most food companies will eventually have to charge more for their products via these pass-through expenses.
The U.S. is returning to a period of food price inflation after coming off a period where we saw food price deflation,” Said, Purdue University agricultural economist Corrine Alexander in statement on Friday.
Unfortunately, there is not much that can done in the short-term to stem the rising tide at this point. Hopefully crude does not top $110 per barrel and crop supplies can recover, bringing food price inflation back down to reasonable levels. In the meantime, hunker down.