Nightly News   |  February 24, 2014

Drought Sends Food Prices Soaring

The first report in the “Nightly News” series The Price You Pay examines how drought is impacting America’s grocery aisles.

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This content comes from Closed Captioning that was broadcast along with this program.

>>> tonight we begin an occasional series of reports about the price you pay, that makes everyone pay more and the price hikes that are holding back so many people from getting ahead. and our focus this evening starts with what we're paying at the food store as all the warnings about the historic drought and the effect on prices sadly become real. we get our report from nbc's tom costello.

>> reporter: grocery shopping for jasmine's family of five is not cheap. averaging 200 a week, she balances it with coupons.

>> meat was on sale this week, that is why i bought it.

>> reporter: and it will likely get more expensive for her and families across the nation. the california drought affected farmers who lost their harvest and sold off their livestock.

>> it means you will probably pay more for that steak when you go to the supermarket, and the burger when you go to the market.

>> reporter: ground beef has gone up from $3.39 a pound and could hit $4 a pounds this year. milk price is also up, 13 cents a gallon since september and expected to keep rising. also to blame, the demand for cheese is exploding overseas. meanwhile, oats, the main ingredient in cereal is up this year. all of this is forcing jasmine to use more strategy.

>> i make my list, i go in, i know what i'm going to get. but once i arrive at the market when i see the jumps then i have to rethink the list.

>> reporter: economists say 2014 could be a year of higher prices across the board, including fruits, vegetables, poultry and pork.

>> the typical american will see a 5% increase in their grocery bill when they check out. everything in that basket will come at a higher price.

>> reporter: adding insult to injury, a drought in brazil is sending coffee prices up, a 35% increase since november. for many that is just too much.

>> there will be coffee in this house at all times. but there is no way i can cut the coffee.

>> reporter: balancing the family budget and personality priorities. tom costello, nbc news, washington.