USDA forecasts 3–4 per cent jump in food prices.

UNITED STATES
Thursday, March 03, 2011

According to The Wall Street Journal, the U.S. Department of Agriculture (USDA) said food prices will jump between 3 and 4 per cent this year, after rising in 2010 by the slowest rate since 1962.

Prices of corn, wheat, and soybeans—crops that are ubiquitous in U.S. food products—are up 88 per cent, 76 per cent, and 37 per cent, respectively, from 12 months ago. The soaring cost of fattening livestock with grain is also helping to lift prices of hogs and cattle to record-high levels. On top of all that, rising oil prices are lifting costs of packaging and transportation.

The USDA raised its 2011 food-inflation forecast on 24 February, from the 2 per cent to 3 per cent range it had been projecting since July. The government’s consumer-price index for all food rose 0.8 per cent in 2010. A change of one percentage point in the food-inflation rate is equal to about USD 12 billion in annual spending.

Some meatpackers seem to be having the most success pushing along their higher costs, in part because per capita supplies of beef and pork are shrinking, which gives them some pricing power. Retail beef prices in January were 9.7 per cent higher than in January 2010 while retail pork prices were 9.9 per cent higher.