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Friday, October 22, 2010

General Mills Signals Faster U.S. Food Inflation: Chart of the Day

David Wilson
Bloomberg

General Mills Inc. showed where U.S. food prices are headed by making some of its breakfast cereals and baking products more expensive, according to Christopher Growe, a Stifel Nicolaus & Co. analyst.

As the CHART OF THE DAY shows, retail prices for food are lower than they were in May though the cost of farm commodities has soared. The food component of the U.S. consumer price index and a gauge of agricultural-product prices, compiled by UBS AG and Bloomberg, were used to make the comparison.

General Mills, the maker of Cheerios, Chex and Wheaties, will raise cereal prices on Nov. 15. The increase will affect about 25 percent of its cereal production and amount to a “low single-digit” percentage, Kirstie Foster, a company spokeswoman, wrote today in an e-mail.

Prices for some baking mixes are set for “a mid single- digit increase,” effective Jan. 3, Foster wrote. The company’s product lines include Betty Crocker, Bisquick and Pillsbury.

“While General Mills may be the first of the large food companies to really press higher on pricing, we believe many others may follow,” Growe wrote. “It’s just a matter of time, given what is coming down the pike in the way of inflation.”

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