Led again by increases in prices for meat and dairy products, the overall cost of items in the FOX Business shopping cart rose sharply in May -- the seventh time the food basket prices have increased in the last eight months.

The May increase -- 60 cents, or 0.83% -- was the largest month-month jump since August 2008 and followed a 56 cents, or 0.81%, increase in April.

The 31-item shopping cart cost $73.00 in May, the highest it has been since January 2009. Year over year the total cost of the items in the shopping cart rose for the third month in a row, with the largest year-year increase since April 2009.

The month-month increase in prices came in the same month in which average hourly earnings rose, but nonetheless it took the average worker almost a minute and a half longer in May to earn the cost of items in the cart than in April.

FOX Business calculates “minutes to earn” by dividing the cost of the basket by average hourly earnings as reported by the Bureau of Labor Statistics [BLS], which also collects average price data in compiling the Consumer Price Index report.

Many of the May price increases appeared to be seasonal. The price of a pound of bacon, for example, has increased in May for nine of the last 12 years and the price of a pound of butter rose in May as it has each May for the last 11 years.

According to the Department of Agriculture’s Economic Research Service, “for 2010 in total, pork production is expected to be 22.1 billion pounds, or 3.8% below 2009 levels, as production in the second and third quarters will be lower than year-earlier” with the supply contraction leading to higher prices.

“Although hog prices have probably peaked,” DOA said, “they are expected to continue much above last year’s levels and should exceed producer break-even levels for 2010 and into 2011.”

ERS economist Ephraim Leibtag said costs also have been a factor not just in hog prices, but beef prices as well.

"For the last three to six months, there’s been an uptick in overall costs and so we had some resurgence of inflation in those categories,” Leibtag said. “In 2009 we saw deflation for the whole year for beef, pork and poultry prices.”

Food-price expert Patrick Westhoff noted there has been a pickup in demand with an improving global economy and increasing exports.

“In general we’ve seen livestock markets come back pretty strong this year,” said Westhoff, co-director of the Food and Agricultural Policy Research Service at the University of Missouri and author of “The Economics of Food.” 

“Last year was a very dismal year for a lot of people in the livestock industry with very weak demand domestically and overseas.”

The outlook for beef products, according to ERS, are that prices will remain elevated.

“Total 2010 beef imports are forecast at 2.5 billion pounds, a 5% decline from 2009 and first-quarter 2010 beef imports were 19% below the previous year’s level,” ERS said in its monthly report.

The price for consumers will depend on exchange rates.

“Any further strengthening of the U.S. dollar vis-à-vis the Australian and New Zealand dollars should have greater implications for beef imports to the United States as opposed to exports, making imported beef less expensive and encouraging imports of beef from Oceania,” ERS said. “This would aid in relieving recent supply constraints of beef for grinding.”

Increases in the price of milk, butter and ice cream led dairy prices up in May. According to ERS, supplies have contracted as well.

“Lower milk production in Oceania has tightened world supplies of major dairy products,” ERS said. “The impact on U.S. markets is to lower milk equivalent imports on both a fats and skims-solids basis and support exports.”

USDA said a month ago milk prices this year will average “well above 2009.”

In addition to the increase in prices for meat and dairy products, prices rose for what FOX Business characterizes as “other” items (in aggregate) -- cola, chocolate chip cookies, beer, potato chips peanut butter and sugar. The price of a pound of chocolate chip cookies jumped 4% in May, the steepest increase this year. The price of a pound of potato chips increased 3.0% in May, the largest month-month increase since December 2008.

In all, prices rose in May for 19 of the 31 items in the FOX Business shopping cart compared with April, when prices rose for 13 items.

MONTH-MONTH

INCREASES (%)

     

MONTH-MONTH INCREASES ($)

   

Item

Price

%

 

Item

Price

$

Grapefruit, per lb.

$0.90

7.3%

 

Bacon, sliced, per lb.

$3.86

$0.22

Bacon, sliced, per lb.

$3.86

6.0%

 

Butter, salted, grade AA,

stick, per lb

$2.99

$0.15

Butter, salted, grade AA,

stick, per lb

$2.99

5.1%

 

Cookies, chocolate chip, per lb.

$3.27

$0.13

Apples, red delicious, per lb.

$1.26

4.9%

 

Potato chips, per 16 oz

$4.59

$0.13

Cookies, chocolate chip, per lb.

$3.27

4.2%

 

All pork chops, per lb

$3.26

$0.12

             
             

YEAR-YEAR

INCREASES (%)

     

YEAR-YEAR

INCREASES ($)

   

Item

Price

%

 

Item

Price

$

Tomatoes, field grown, per lb.

$1.92

21.1%

 

Tomatoes, field grown, per lb.

$2.13

 $   0.33

Sugar, white, per lb

$0.64

13.2%

 

Ice Cream, pre-packaged

bulk, per ½ gal

$4.56

 $   0.28

Apples, red delicious, per lb.

$1.26

9.8%

 

Butter, salted, grade AA,

stick, per lb

$2.85

 $   0.21

Butter, salted, grade AA,

stick, per lb

$2.99

7.7%

 

Bacon, sliced, per lb.

$3.86

 $   0.20

Ice Cream, pre-packaged

bulk, per ½ gal

$4.56

6.6%

 

Potato chips, per 16 oz

$4.59

 $   0.16

             
             

MONTH-MONTH

DECREASES (%)

     

MONTH-MONTH

DECREASES ($)

   

Item

Price

%

 

Item

Price

$

Eggs, grade A, large, per doz

$1.52

(14.4%)

 

Eggs, grade A, large, per doz

$1.52

($0.26)

Tomatoes, field grown, per lb.

$1.92

(10.0%)

 

Tomatoes, field grown, per lb.

$1.92

($0.21)

Broccoli, per lb

$1.52

(5.6%)

 

Beef for stew, boneless, per lb

$3.71

($0.19)

Beef for stew, boneless, per lb

$3.71

(4.8%)

 

Broccoli, per lb

$1.52

($0.09)

Spaghetti and macaroni, per lb.

$1.09

(3.5%)

 

Spaghetti and macaroni, per lb.

$1.09

($0.04)

             
             

YEAR-YEAR DECREASES (%)

     

YEAR-YEAR

DECREASES ($)

   

Item

Price

%

 

Item

Price

$

Bananas, per lb.

$0.57

(8.2%)

 

Bologna, all beef or mixed, per lb.

$3.18

($0.14)

Potatoes, white, per lb

$0.57

(7.3%)

 

Beef for stew, boneless, per lb

$3.71

($0.13)

Spaghetti and macaroni, per lb.

$1.09

(7.0%)

 

Peanut butter, creamy, per lb.

$2.06

($0.12)

Flour, white per lb.

$0.49

(5.8%)

 

Orange juice, frozen

concentrate 12 oz can

$2.49

($0.11)

Lettuce, iceberg, per lb.

$0.84

(5.6%)

 

Spaghetti and macaroni, per lb.

$1.09

($0.08)

 

Mark Lieberman is the senior economist for the Fox Business Network. Prior to joining FOX, he served as first vice president and manager of economic analysis and research at Washington Mutual in New York. Before that, he served as senior vice president at Dime Savings Bank of New York (which was later acquired by Washington Mutual), where he specialized in credit and risk management. He is a member of the Executive Committee of the New York Association for Business Economics. He has a degree in Economics from the Wharton School of the University of Pennsylvania.

Follow Mark on Twitter at foxeconomics: http://twitter.com/foxeconomics