Global food sales grew an average of 1.8% last year, hampered by price increases for most staple items, including milk, eggs, corn and wheat. Food producers have also been impacted by higher electricity and fuel costs, part of what one analyst described as a “perfect storm” for the industry. In 2007, Kraft spent $1.3 billion to cover a 9% increase in the cost of ingredients. Large, diversified companies and discount stores are best situated to weather the crisis, compared to smaller markets and makers of generic or minimally processed products. To cope with higher costs, companies have raised prices, improved sourcing, cut expenses and introduced new products aimed at budget-conscious consumers. However, higher food prices are unlikely to moderate soon as demand from emerging nations and for biofuels continues to grow. Source: The Economist