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Your burger is about to get pricier

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NEW YORK (CNNMoney) -- As the widespread drought continues to damage grain crops across the Midwest, consumers could soon be facing steeper bills at the grocery store.

"We haven't seen any rain at all, and based on that, food inflation is definitely a real threat," said Phil Flynn, senior energy analyst at the Price Futures Group in Chicago.

The dry, scorching heat has had the most severe impact on corn crops.

Nearly 40% of the corn planted across the nation is in poor or very poor condition, compared to just 11% at this time last year, according to to the U.S. Department of Agriculture

The drought and the fear that conditions could worsen, further pressuring crop yields, has triggered a 50% spike in the prices of corn futures over the past month to $7.79 per bushel.

On average, food prices typically rise 1% overall for every 50% jump in corn prices, said Richard Volpe, an economist for the Economic Research Service of the U.S. Department of Agriculture, but particular categories of food are impacted more severely.

Analysts and economists predict that prices of beef, pork and poultry will jump the most, as corn is the main feedstock for chicken, cattle and pigs.

Prior to the drought, analysts had predicted a 4% to 6% rise in retail beef prices, said Michael Miller, senior vice president of global research for the National Cattlemen's Beef Association.

But if the drought lingers and the high cost of corn continues to weigh on farmers, consumers could face an increase as high as 10% for fresh protein at the grocery store, said Miller. That means beef prices could jump from an average of $4.35 per pound in 2011 to an average of nearly $4.80 per pound this year.

Then with the flooding elsewhere it looks like a lot of price ripples will occur.

by on Jul. 18, 2012 at 7:23 AM
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by Ruby Member on Jul. 18, 2012 at 7:16 PM


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