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Relative Impact of Corn and Energy Prices in the Grocery Aisle

Retail food prices measured by the Consumer Price Index (CPI) for food have begun to accelerate
and are beginning to approach rates of increase last seen in mid2004.
Critics of renewable fuels are
blaming the recent increases on high prices for corn caused by increasing ethanol production. They
fail to point out that corn prices are only one of many factors that determine the CPI for food, and in
fact, directly affect a small share of retail food prices. Increases in energy prices for example exert a
greater impact on food prices than does the price of corn. A 33 percent increase in crude oil prices –
which translates into a $1.00 per gallon increase in the price of conventional regular gasoline –
results in a 0.6 percent to 0.9 percent increase in the CPI for food while an equivalent increase in
corn prices ($1.00 per bushel) would cause the CPI for food to increase only 0.3 percent.

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Date Of Record Release 2009-10-15 13:28:57
Description Retail food prices measured by the Consumer Price Index (CPI) for food have begun to accelerate
and are beginning to approach rates of increase last seen in mid2004.
Critics of renewable fuels are
blaming the recent increases on high prices for corn caused by increasing ethanol production. They
fail to point out that corn prices are only one of many factors that determine the CPI for food, and in
fact, directly affect a small share of retail food prices. Increases in energy prices for example exert a
greater impact on food prices than does the price of corn. A 33 percent increase in crude oil prices –
which translates into a $1.00 per gallon increase in the price of conventional regular gasoline –
results in a 0.6 percent to 0.9 percent increase in the CPI for food while an equivalent increase in
corn prices ($1.00 per bushel) would cause the CPI for food to increase only 0.3 percent.
Classification
Resource Type
Format
Subject
Source Biodiesel Sustainability
Keyword Biodiesel fuel, Biofuels, Food prices
Selector Offley
Date Of Record Creation 2009-10-15 13:23:36
Education Level
Date Last Modified 2010-05-13 16:52:44
Creator John M. Urbanchuk
Language English
Date Record Checked: 2009-10-15 00:00:00 (W3C-DTF)

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