Food Prices Skyrocket: Were Going to Have a Major Problem Coming Into the FallMac Slavo By all accounts, the reality is that we are now factually in a recession, a point further emphasized by the recent revelation that American companies are experiencing near zero percent earnings growth. But thats just the beginning. As we warned earlier this year, food prices would see a steady rise through 2014 because of increased global demand, drought and continued degradation of the U.S. dollar. The Producer Price Index made available by the Bureau of Labor and Statistics this morning has now confirmed those fears. Consumers are seeing an immediate impact to their wallets in the form of food price inflation and in all likelihood the trend will continue going forward. These latest numbers are serious. So much so that according to Zero Hedge, the last time food prices spiked by this much in one month, the resulting Arab Spring wave of revolutions tumbled governments across north Africa and the middle east. Karl Denninger at The Market Ticker warns that this is bad news because consumers are now paying 7.4% more for food on an annual basis than they were last year, a scenario which could lead to macro-economic repercussions by Fall. Theres a problem with that however services were up the same 0.6% monthly behind an 0.7% increase last month, and core is up 0.3% on goods, which is a 3.7% rate of increase. This pushed the 12 month rate beyond the Feds 2% target. The next claim that will be made is that this is transitory. Unfortunately the intermediate (~1-3 months forward) and crude (~3-6 month forward) numbers tell a very different story. The intermediate trend in foods is bad news; that is amonthlychange. Energy has been the counterbalance the last two months on an intermediate term, and has kept things in check, and less foods and energy has been reasonably-behaved right up until this year. Now its looking less-so. But the alarm bells are not there, theyre in the forward trend on the crude side. Heres the problem were several percent ahead of last years rate at this time of the year. Spring into early summer tends to have a PPI increase in crude goods. But if that spread continues were going to have a major problem coming into the fall as this works through the system, and given unit labor costs and productivity numbers (both going the wrong way too) there is no ability to absorb it. Now let me point out that were not quite where you have to ring the oh crap bell yet. Theres another month or two before that happens but by June, if the trend were seeing here hasnt broken this will get into the forward economic analysis mindspace of most of the people who look at this stuff. I dont like the trend at all. Charts and full analysis Within the next couple of months were going to have a very good idea of where this is all headed. If prices dont turn down, then by Fall were going to have a big problem: Look out below. Related selfnews Post Article: You can read more from Mac Slavo at his site SHTFplan.com, where this first appeared. 