A lot of ingredients go into rising grocery bills

"Ethanol got us started down this line, but other things moved to the forefront," said Darrel Good, professor of agricultural economics at the University of Illinois.

This year, such tectonic shifts in demand have met with shorter-term supply constraints to exacerbate the inflation. Because the markets for raw materials are often linked — both across geography and with each other — problems in one market can spread to another.

Take soybeans. When U.S. farmers planted more corn this year to meet demand for ethanol, they devoted less acreage to soybeans. That has squeezed soybean supplies and helped push prices up more than 40 percent since the year began. Soybeans recently cost as much as $10 a bushel, up from $7 a bushel in January.

Or witness the wheat market. A failed crop in the Ukraine started prices rising sharply in the U.S. The situation snowballed as one wheat crop after another worldwide was damaged by either too much rain or too little, leaving foreign buyers frantic to stock their shelves. Global stockpiles have dwindled to a 26-year low and sent prices surging higher. In Italy, consumer groups staged a symbolic pasta protest last month over the rising price of the country's wheat-based staple.

A bushel of wheat recently topped $9.50 — nearly 90 percent more than it cost at the start of the year, when wheat traded around $5 a bushel.

In addition, a weaker U.S. dollar has raised foreign demand for commodities, which appear cheaper to buyers abroad. The greenback tumbled earlier this month to an all-time low against the euro.

"All along the chain, you're seeing price inflation," said Standard & Poor's Chief Economist David Wyss. "It's a significant impact on food prices, but it takes a long time to show up."

High commodity prices tend to trickle slowly down to the consumer as growers, food manufacturers, distributors and retailers each swallow a portion of the added cost before passing a chunk of it on to the consumer. But with costs up for more than a year the trickle-down process is under way.

The Labor Department reports food inflation is running at 4.2 percent annually — twice the rate of overall inflation. Nationwide, milk prices are up 18 percent since the start of the year, while eggs cost 35 percent more than they did a year ago. The USDA estimates overall food price inflation will run 3 percent to 4 percent in 2008.

The big picture, at least in the U.S., is that higher food prices don't hurt like they used to. Today, about 8.5 percent of the American household budget goes to food at home, down from an average of 19 percent of the total budget in 1960, Wyss said. While food inflation is high, it's not hyperinflation, he said.

But it's enough for some shoppers to notice and alter their habits.

Talking in a parking lot a stone's throw of two corn fields, Andrea Williams said she's cut back on buying beef, and steaks in particular, and she's begun scanning grocery advertisements for sales.

"That's basically my meal planner," she said. "If pork chops are on sale, guess what's for dinner?"

Don't miss this on MSNBC.com Pass it on: Sons of infertile men may be next The eight biggest Olympic marketing debacles Reality show judges range from wise to wacko Cosmic Log: Is this your jetpack? Forget your inhibitions: World's sexiest islands

MORE FROM FOOD INC.

Food Inc. Section Front

Starbucks Via stirring discontent CNBC: Coke looking for the next real thing Burger King franchisees sue over $1 promotion McDonald’s to open 1,000 new locations in ’10 $5 footlongs turbocharge Subway Who’s your patty? Not McDonald’s Starbucks sees increase in spending, visits 7-Eleven is getting into the value wine business Pork still thriving despite swine flu scare Maine sours on lemonade with trace of alcohol Food Inc. Section Front   Add Food Inc. headlines to your news reader: