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Expect food prices to soon shoot up 5-7%, economists say

Families who are budgeting for rising fuel costs will soon have to contend with higher grocery bills. The cost of coffee and beer is also expected to shoot up.

Economists predict consumers will notice an increase in food prices by the end of the year.

Costs are expected to spike between five and seven per cent, meaning a family of four that spends about $400 a month on groceries will have to shell out an extra $340 a year.

“Based on what I’ve seen in the past, it takes about nine to 12 months for an increase in raw food material prices to get fully passed on and to fully work their way down to the grocery shelves so I think by the end of this year we’ll be looking at much more rapid food price inflation,” BMO Nesbitt Burns deputy chief economist Douglas Porter said.

Food costs have been on the rise for eight consecutive months, according to the United Nations Food and Agriculture Organization.

Last week, George Weston Ltd., which owns Loblaws and baker Weston Foods, announced it was passing the higher cost on to consumers. The five per cent increase will take effect April 1, the company said.

The Canadian Association of Independent Grocers said it will try to hold off on price increases as long as possible by offering fewer discounts and coupons.

Maple Leaf Foods has also announced it plans to increase fresh bakery goods prices by 20 cents at the end of this month.

Bad crops, high oil prices and a struggling economy are responsible for the price spikes. The cost of wheat has doubled in the past year. Sugar prices have gone up 40 per cent.

Tim Hortons has also said it will have to raise prices to cope. Menu prices have already gone up by three per cent at its U.S. stores.

A cold one is also going to soon cost more and beer drinkers can blame a really bad year for barley crops both in Canada and Australia for that.

Beer prices could increase anywhere from 10 to 15 per cent, starting next year. Brewers say they have enough stock to tide them over until 2012.

With files from The Canadian Press.