Rising Grocery Bills

Not only are fuel prices increasing, but consumer products are expected to increase due to Hurricane Katrina. Economist Nariman Behravesh is forecasting that consumer products such as chocolate, fresh produce, and coffee are a few items that will increase in price in the near future. This is expected since the seaports used for shipping these items have been seriously disrupted from Hurricane Katrina. It will also hurt the United States economy in the fact that shipping out wheat, grain, and retail products will be a prolonged challenge. It is estimated that one-fifth of all U.S. imports and exports are shipped through the Gulf Coast annually, and accounts for nearly $150 billion, according to Economy.com. Even more devastating is that southern parts of Louisiana are the largest ports in the nation.

How much of an effect do you think this is going to have on consumer spending in the near future? Do you think small businesses such as convenient stores will be able to survive the increasing prices, or will they be forced to shut down? Will large businesses such as Wal-Mart have much of an effect? What is going to happen to the production possibilities frontier?