Breakfast costs more these days

U.S. consumers are paying 8 to 10 percent more for breakfast foods than a year ago because of rising prices for corn, wheat, milk and other commodities, a Department of Agriculture (USDA) economist said Wednesday.

Commodity inflation "is starting to work its way through the system," said Ephraim Leibtag of the USDA's Economic Research Service. "The last few months we've seen it rise."

Food prices overall will probably increase 3.5 to 4 percent this year, about one percentage point more than usual, Leibtag said.

General Mills, the maker of Cheerios, said June 5 it would raise prices as much as 4 percent this month to counter higher grain and energy costs.

Increased use of corn for ethanol and falling supplies of orange juice and milk are partly responsible for the jump in breakfast-food prices, Leibtag said.

Corn futures have surged 64 percent in Chicago in the past year, boosting costs to feed livestock and poultry and driving up meat and egg prices.

Retail prices for orange juice have climbed 20 to 25 percent from a year ago, while eggs have climbed 15 to 20 percent and milk is up 4 to 6 percent, according to USDA research.

Tropicana Products and Minute Maid have increased retail orange-juice prices amid forecasts for Florida's smallest crop since 1990. Florida is the second-biggest orange grower after Brazil.

Kellogg, General Mills' larger rival and the maker of Frosted Flakes cereal, boosted prices as much as 5 percent at the end of last year.