Meat-loving consumers will pay a higher price for their favorite meals this year.
The U.S. Department of Agriculture’s overall food-inflation forecast was left unchanged, but they raised their forecasts on beef, pork and vegetable prices, signaling further food inflation increases, according to their revised Consumer Price Index report today.
Food-price inflation remained steady at 3 to 4 percent for 2011, still the highest levels since 2008. Grocery store prices are forecast to rise 3.5 to 4.5 percent, while restaurant prices are forecast to increase 3 to 4 percent for 2011, the USDA said.
Overall meat prices are expected to climb steeply, 6 percent to 7 percent over 2010, up from its March 25 forecast of 4.5 percent to 5.5 percent. Beef is forecast to jump 7 or 8 percent in 2011, up from a March forecast of 4.5 percent to 5.5 percent. Pork is expected to increase by 6.5 to 7.5 percent, up one percentage point in the March forecast.
“Cost pressures on wholesale and retail food prices due to higher food commodity and energy prices, along with strengthening global food demand, have pushed inflation projections for 2011 upward,” said Ephraim Leibtag, USDA economist, in an analysis accompanying the report.
While beef and pork futures traded lower or flat on the Chicago Mercantile Exchange on Monday, in recent months livestock prices have soared based on higher feed costs. Cattle futures hit an all-time high in April, while grain prices have been soaring on strong demand and weak production. On Monday, wheat for July delivery rose 14 cents to $8.3475 a bushel; July corn gained 4 cents to $7.4450 a bushel; July oats were unchanged at $3.97 a bushel; while July soybeans jumped 20.50 cents to $13.8975 a bushel, according to the Associated Press.
But jumping on the vegetarian bandwagon may not be good for the budget, either. Consumers seeking fresh produce will also feel the pinch. Fresh vegetables are expected to increase 4.5 percent to 5.5 percent for 2011, up from their previous forecast of 4 percent to 5 percent. Already the fresh vegetable index increased 4.2 percent in March. Since last year at this time, fresh vegetable prices are up 9.8 percent, with potatoes up 12.1 percent, lettuce up 27.3 percent, tomatoes up 10.6 percent, and other fresh vegetable prices up 5 percent, the USDA said. Crops of lettuce have been hit hard by freezing weather in Arizona and Mexico.
The USDA also raised its projections for fats and oil by one percentage point to 6 to 7 percent. Costs of fruits and vegetables will jump 3.5 percent to 4.5 percent, a half of percentage gain from the previous report.
Earlier this year, U.S. economist Nouriel Roubini, known as “Dr. Doom,” and other experts warned at the World Economic Forum in Davos that sharp rises in food and energy prices pose a serious threat to global stability.
The report was part of the USDA’s regular updates which provides food price forecasts for the short-term period of 12 to 18 months.
Related Links:
USDA Raises Beef, Vegetable Price Forecasts (The Wall Street Journal)
Bistro owners blame high food costs (Colorado Springs Gazette)
Food costs could push more out to the garden (Clinton Herald)
