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In this month's edition of Facts, Figures & The Future, Phil Lempert writes about the food price hikes that are roiling the retail business and causing enormous concern among consumers.

Lempert writes: "According to recent figures from the Bureau of Labor Statistics figures show that during the 2007 calendar year, U.S. food prices increased by a whopping 4.9% - .8% higher than 2007 inflation rates and 2.8% higher than food prices increased in 2006. And most food folks would agree that we ain't seen nothing yet!

"In the past, agricultural commodity prices tended to be volatile, with an overall decline trend, because they were supply-driven. Technology and productivity improvements in farming increased agricultural yields to meet supply, keeping prices down. Today, higher fuel prices are increasing the cost of transporting commodities, while various weather conditions and trade issues are currently contributing to lower supply. The result is higher prices across the board … With global commodity stocks at historic lows, a growing demand for food, feed and fuel, tight supply, and no plan for increased agricultural productivity, this higher price phenomenon is likely to continue. The International Food Policy Research Institute estimates that global cereal prices will rise 10 to 20% by the year 2015."

Lempert believes that the biggest challenge facing retailers and manufacturers is one of communication: "Just how can we explain these increases to our shoppers? There is little doubt that the headlines will continue and with those will come consumer frustration and anguish - some of which will be retail focused; how we handle these may well determine which retailers grow and prosper...and which find themselves losing market share."

Other stories in this month's F3 include:

• A look at how health and wellness consciousness in the US is affecting shopper behavior.

• An examination of how gluten-free products are growing, providing a sales engine for retailers and suppliers that are investing in the category.

And, there's much more.

To get your copy of F3, go to:

F3 is a joint production of the Food Marketing Institute (FMI), ACNielsen, and Phil Lempert.

(Full disclosure: MNB Content Guy Kevin Coupe is a contributor to F3.)

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