Meltdown 101: How are food prices set?

Associated Press
By EMILY FREDRIX May 13, 2009

In a sour economy, you can pad your budget by cutting out cable, trips to restaurants and vacations. But you can't cut out food.

Americans spend about 12.5 percent of their budgets on food each year, according to the Bureau of Labor Statistics. That means many families' finances are at the mercy of fluctuations in food prices, which soared last year and now are retreating.

What determines just how much you pay at the supermarket for a loaf of bread or a bag of chips?

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