Our cover story this month (p. 20) looks at how rising grain prices have provided an unexpected boost in sales and profits to grocers, wholesale clubs and discounters. Shoppers eager to ease the pain in their pocketbooks are bargain-hunting and increasingly shifting buying food from supermarkets to the discounters and wholesale clubs. At the same time, supermarkets are picking up business at the other end because Americans are eating out at restaurants much less frequently.

The upshot of this trend is that retailers operating in all of those formats remain extremely busy and many are on the hunt for new locations. They are also increasing same-store sales and earnings expectations at a time when most other retailers are doing the opposite and either scaling back openings or closing stores. As a consequence, developments featuring these retailers are much more likely to get built. In a way, the strength of these formats is helping to keep development of new centers going at a time when it otherwise might be coming to a halt completely.

The net effect is that as a whole it makes the retail picture look a lot less bleak than it otherwise might be. Put another way, Wal-Mart's and Costco's sales gains more than offset the losses for other formats. As a result, retail same-store sales come in positive and provide a brighter picture than for most retailers.

One thing we have to ask: Are rising food prices merely papering over what is ultimately a major problem for the retail sector? Inflation is looming. In the end, rising food and gas prices are holding up sales figures. Consumers, however, are spending money right now because they have to, not because they want to. Americans are being bled dry and falling deeper into debt now and will not be able to bounce back quickly when the economy improves.

Rising commodity and fuel prices also present an even graver threat in that they can lead to more generalized inflation. That certainly can't be welcome when economic growth has been so weak for the past few quarters and it remains eminently possible that the economy will slip into a full-fledged recession.

Rising food costs also represent another burden on already stretched consumers. Americans have seen real wages stagnate or decline for years. That didn't end up being as painful as it could during the past half decade, however, because rising housing prices cushioned the blow. Homeowners took advantage of rising prices to trade up and buy larger homes or to take out new home equity loans and use those funds as spending money. Needless to say, that's long over. In fact, recent data indicates that housing price declines are accelerating. According to the latest S&P Case-Shiller index, house prices fell 15.3 percent year-over-year through April 2008. In the last quarter, the annualized pace of decline was an incredible 22.1 percent. Home prices are now falling faster than during the Great Depression. According to one estimate, $4 trillion in housing wealth evaporated in just the last 12 months.

In the end, we can't help but wonder if retailers should be trying to give consumers a break rather than cashing in on the misery of food inflation. In the long term, wouldn't that be what's best for the retail sector at large?