Food Prices Rising At Slower Rate Than ExpectedMon, 19 Aug 2013 16:29:48 CDT
The USDA has reduced its forecast for food price inflation this year to one and a half to two percent. USDA economist Rick Volpe says a number of factors are contributing to the less-than-expected increase.
“ We were initially looking at three to four percent increase, which was above average. That was before we knew that we were going to have these lower fuel prices, and the strengthening U-S dollar, the overall improvement in the economy. We are still looking at some food prices that are going to go up a little bit more than average and some that will go up less than average. But on the whole we are looking at moderate food price inflation for the year, which is good news especially given the initial outlook we had when the drought broke in July and August of 2012.”
Volpe says one of the biggest bits of good news for consumers is the downward revision of price increases for dairy products.
“We were initially forecasting pretty strong price increases for the year 2013. But it turns out we saw most of the impacts of the drought at the tail end of 2012. So we’re now on track for very moderate price increases for dairy for the foreseeable future. One to two percent in 2013.”
And, although beef prices won’t be increasing as much as expected, beef will remain expensive this year.
“We’re now looking at beef prices to increase between two and three percent on the year. But I should note that many beef prices have reached record or near record levels across supermarkets in the U.S. So inflation for the beef category may be small in percentage terms, but it’s not as if consumers are seeing any relief there.”
Among food prices that will still see high inflation, Volpe says poultry will be going up three to four percent and eggs will be going up two to three percent if not more.
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