About a year ago, some pundits predicted a double dip recession, which never really materialized. But those fears might come to pass this time, according to a new study by Customer Growth Partners (CPG), a research and consulting firm serving the retail and consumer products industries.
Escalating energy prices and the steepest rise in food inflation in a generation -- amid a tenuous economy -- are conspiring to set the stage for a double dip recession, the report says.
If food and energy prices keep going up, a recession could possibly unfold in the third quarter of the year, Craig Johnson, CPG president, told WalletPop. However, it's important to keep in mind that "a recession depends on a variety of economic factors beyond these two," Johnson adds.
Gas prices are now about $3.90 per gallon, up 25% for the year to date -- the sharpest rise since 2008, when prices soared to $4.17 -- and they're still creeping up, the report says.
Compounding matters are rising food prices. According to CPG's latest Inflation Monitor survey, retail food prices are already up 6.5% from January.
Still, Johnson says, "Many Washington policy makers ignore food and energy inflation because they're not part of the core inflation index. But these are very important to the average American family."
So what does this all mean for consumers? "Food and energy prices are going to continue rising for the indefinite future," Johnson says. Expect that high food prices will continue into the fall and possibly next winter, when "agricultural production expands in response to the higher food commodity prices," he explained.
As for energy prices, Johnson added, "They'll turn around when peace breaks out in The Middle East -- an ironic statement."
Until then, consumers need to "batten down the hatches," he says, by shifting into savings mode. Check out these tips to do just that, by cutting your gas and meat costs.