In 2006 Iowa, the nation's largest corn producer, harvested 2.2 billion bushels of corn. When all the ethanol plants now being expanded or under construction there are finished, they will consume the state's entire corn crop. Out of the total of 11.2 billion bushels of corn grown in the U.S. last year, 1.6 billion (14.3 percent) went into ethanol production. Ethanol producers are expected to make at least 5.4 billion gallons this year -- double what was produced in 2003 and less than half of what is projected in 2009.
http://www.iowacorn.org/cornuse/cornuse_3.htmlhttp://pewresearch.org/pubs/529/ethanol-demand-outgrows-cornYou can't have that much corn going into ethanol production without seeing the effects in the human food chain. Corn is used in an amazing variety of ways in almost every processed food in the supermarket -- if not in the food itself, then in the bioplastic packaging surrounding it. So between the increase in the price of corn -- $3.64 a bushel and more earlier this year, although it has dropped back into the $2.81 range lately -- and the overall rise in fuel prices -- still high despite the recent dip -- it's inevitable that food prices in general would go up.
Which helps explain why companies are scrambling to scale up industrial production of ethanol from wood chips, switch grass,and other materials. Cellulostic ethanol is probably the future for ethanol production. Using corn and other food crops is, I hope, just a stop along the way.
Edited to add: The political part is this -- under our current administration, the cost of living index is regularly "adjusted" so that these increases in food and fuel don't show up in the "official" number and spoil one of Tony Snow's news briefings with the truth.