Farmers Face Rising Costs That Will Hit Your Grocery Bill

Food prices could be on rise within the next 60-90 days.  That according to St. Cloud State Economist King Banaian, who joined me on WJON Wednesday.

Product Prices Going Up

Banaian says farmers have had to pay more for diesel fuel and for fertilizer this spring.   He believes those costs will mean an increase in food prices within the next 60-90 days.  He says the products most adversely affected will include corn, petroleum products and plastics.  Banaian believes these food cost increases could hurt more than gas prices because most people's food expenses are a bigger part of their monthly budget.

Slow Gas Price Decline

Gas prices have been on a slow decline over the past couple of weeks.  Banaian believes there are 2 reasons for that.  He says the reasons are a declining economy and a slowing of demand for gas.  Banaian isn't confident that either are true because personal income data still looks favorable.  He says there is optimism that the end of the U.S./Iran conflict would help lower gas prices.

Possible End to Conflict

If a deal is reached soon to end the U.S./Iran conflict, Banaian says gas prices will slowly decline because it will take awhile for production to pick up and for distribution to reach their desired locations.

Minimum Price Law

There is a minimum gas price law in Minnesota and Banaian says this is to prevent stations from pricing below the minimum.  He says that doesn't keep them from pricing their gas above the minimum.  Banaian says it is possible that some gas stations choose to increase their price above the minimum more than the competition to increase their profit heading into a weekend.

Unemployment Rate

The local unemployment rate continues to be low.  Banaian says this rate is almost always low in the spring but changes as the summer goes on.  He says businesses are largely not hiring but aren't firing either.  Banaian doesn't believe this indicates there is a healthy labor market.  He says there are indications that workers feel less secure in their jobs.

If you'd like to listen to my conversation with King Banaian, click below.