One of the most difficult things for many of us to understand is why the Federal Reserve hasn’t made a move to rein in inflation — at least a little bit. This concern has been picking up speed ever since reports of food inflation were released by the United Nations, and since the USDA warned that food prices are likely to continue rising in 2011. With this in mind, it seems as though policymakers should be on the verge of doing something (usually raising interest rates) to help slow inflation.

The only problem is that the figure used to determine whether or not we have an inflation problem is known as “core” inflation. And core inflation doesn’t include food prices. (It also doesn’t include gas prices). The issue that many have with the concept of core inflation is that food prices and gas prices are the things that are likely to affect most of us on a daily basis. So policymakers don’t adjust to account for this type of inflation, but most citizens feel it in a very real way in their budgets.

Which Foods are Becoming More Expensive?

As 2011 gets under way, it can help to consider which foods are becoming more expensive. Bloomberg reports on the U.N.’s 2010 figures, and finds that refined sugar, corn, soybeans and wheat are on the rise. These are staples that many of us are familiar with. These are items that we not only see in our own kitchens, but are also used to create many of the food products we buy. You might be surprised, if you looked at an ingredient list, at what items are in our foods — especially processed foods.

Part of the reason that we are seeing food inflation in staples is due to demand from the developing world. Developing countries, especially China and India, are showing increased demand for food. These countries have emerging middle classes that have more discretionary income than what they had in the past. This is being spent on more food — and even on cars (one of the reasons some feel that gas prices are due to begin rising rapidly soon).

What Can You Do About It?

You won’t be able to rely on the government to help you out of this one. You will have to take your own measures to help fight inflation in your own personal economy. One of the things you can do is to purchase staples that haven’t started rising in price. Yahoo! Finance asserts that rice and dairy are among the staples that haven’t risen so far. But, of course, you can’t subsist only on rice and dairy. Here are some other things you can do to help reduce the sting of food prices inflation:

  • Build up your home food storage with bottled and canned staples. You can buy now, and put off paying higher prices later.
  • Grow your own food. While produce prices haven’t spiked as much as others, many believe that produce prices could rise. Your own garden could help you create your own supply, reducing your reliance on what you buy in the store. Plus, you can bottle the extra.
  • Buy less processed foods. One of the issues is that many of the staples (refined sugar, corn/corn syrup, wheat) that are seeing price increases are main ingredients in processed foods. Instead of buying meals that are ready to eat, get used to making your own.
  • Consider co-ops that allow you to pool your resources with others to purchase different foods, including meat, dairy and produce.

There are things you can do to beat food prices inflation, but you need to plan it out, and take the time to consider your options.

This post was included in the Family Finance Carnival



Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.