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McDonald's to consider increasing prices

Oak Brook-based McDonald's says it's considering raising prices on some menu items in 2011. CFO Pete Benson says rising costs for commodities such as beef will be a big factor in whether prices go up.

Ephraim Leibtag is deputy director of research at the USDA's Economic Research Service. He says McDonald's probably won't be hit as hard as other retailers.

“Restaurant prices have additional layers of value added that are not directly related to commodities,” he said. “And so the final price of a restaurant meal, although influenced by the food cost, is a smaller share than, say, the final product in a grocery store.”

Leibtag said commodities prices will continue to trend upward as long as grain and gas prices remain high. A Consumer Price Index forecast for 2011 shows an overall 2-3 percent increase in food prices for both restaurants and grocery stores. That same index shows beef prices are forecasted to edge up 3.5 percent.

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