NEW YORK — Breakfast is now being served with a side of sticker shock.
The price of bacon is surging and the cost of other morning staples, like coffee and orange juice, is set to rise because of global supply problems, from drought in Brazil to disease on U.S. pig farms.
And it’s not just the first meal of the day that’s being affected. The cost of meats, fish and eggs led to the biggest increase in U.S. food prices in nearly 2 1/2 years last month, according to government data. An index that tracks those foods rose 1.2 percent in February and has climbed 4 percent over the last 12 months.
While overall inflation remains low, the increases in food prices are forcing shoppers to search out deals and cut back.
Even though food companies use a range of cost-cutting methods to limit the effect of higher food costs, consumers likely will feel the “ripple effects” of rising commodity prices, according to the Grocery Manufacturers Association, a trade organization for more than 300 food, beverage and consumer product companies.
Here’s a rundown of why breakfast food costs are rising, and why they could keep going up.
Bringing home the bacon is costing more.
The price of lean pork in the futures market is at record levels and is up 52 percent since the start of the year, to $1.31 a pound. Traders are concerned about a deadly virus in the U.S. hog population.
That could further boost bacon prices, which already were rising after farmers cut pig production because of higher feed costs. Those costs climbed after a drought in 2012.
The average price of a pound of sliced bacon in U.S. cities was $5.46 in February, up from $4.83 a year earlier, government data show.
The retail price of pork is projected to climb by 2.5 percent to 3 percent this year, according to government forecasts.
“You should expect to see very high prices for your ground beef, your other meat cuts, all the pork cuts will be higher this year,” Donnie Smith, CEO of Tyson Foods, said in an interview with CNBC on March 12.
U.S. pig herds have been hit by a virus called porcine epidemic diarrhea, or PED, which causes vomiting and diarrhea in the animals. While the disease doesn’t affect people and is not a food safety concern, it can lead to mortality rates of between 80 and 100 percent in newborn piglets. That’s raising concerns as the U.S. heads toward the summer grilling season, when demand typically picks up.
Traders don’t know exactly how badly the virus will impact pork production because it’s the first time that PED has been detected in U.S. herds, says Dennis Smith, a commodity broker at Chicago-based Archer Financial Services.
“It’s become a hysterical market,” Smith says.
Gus Kasimis, 60, manager of the Green Kitchen Restaurant, a New York diner, said that he had been forced to pass on higher costs to customers.
But he’s not worried that people will stop coming.
“They still need to get a decent breakfast,” he said.
You need your morning brew, and you’ll likely pay more for it, at least at the supermarket.
Coffee futures have surged 57 percent this year and this month rose above $2 a pound for the first time in two years. Coffee growing regions of southern Brazil, the world’s largest coffee producer, have been hit by drought.
Shoppers should be prepared to pay more, said Dan Cox, the president of Coffee Analysts.
“Whether it’s by the can or the bag, consumers should probably expect to pay 50 cents per pound more, fairly soon,” Cox says.
Orange juice futures are up 12 percent this year, and climbed as high as $1.57 a pound March 6, their highest price in two years.
The price of a 12-ounce can of frozen orange juice edged up in February to $2.43 from $2.41 in January, according to government data. Florida’s orange crop is forecast to be the worst in almost 25 years. A citrus greening disease, transmitted by tiny insects that feed on the leaves of oranges, is hurting the harvest.