Heatstroke

The last time grocery-store customers stared at prices with such dismay was in the 1970s, when inflation was moving as fast as the numbers on a cash register. This summer the drought has sent food prices leaping again, even though inflation in the rest of the economy remains at tolerable levels. The Government said last week that during July the Consumer Price Index rose 0.4%, an annual rate of 5.2%. But the subindex for food and beverages jumped 0.9%, raising the possibility of double-digit inflation at the supermarket. Among the hardest hit in July: fruits and vegetables (4.7%), poultry (7.4%) and eggs (9.6%). Prices for many meat and dairy products are rising because the cost of animal feed has gone up.

The price jump came sooner than economists had predicted, primarily because some food-processing companies raised their prices before they started paying more for their raw materials. But many producers have not yet hiked their prices; when they do, further retail increases are likely. The devastation of the durum-wheat crop in North Dakota, for example, is bound to result in heavy markups on pasta. The Agriculture Department maintains that the inflation rate for food this year will stay within its predicted range of 3% to 5%, but that forecast is looking increasingly wishful.

The sudden food inflation has prompted some consumers to suspect that many people in the food chain -- from farmers to retailers -- are using the drought as an excuse to gouge customers a bit, which may be true in a few cases. Government economists acknowledge that the dry spell has created an atmosphere in which consumers respond to the price increases with grudging acceptance. But some prices are still bound to produce a mild case of sticker shock. At one market in Baltimore, boxes of Post Grape-Nuts cereal have been marked up four times in the past six weeks. The 12-oz. package now costs $2.01, up 30 cents.