Expect Higher Food Prices in 2013

January 1, 2013 12:54 AM
 

SOURCE: USDA's Bob Ellison

A USDA economist says Americans will be paying more at the grocery store in 2013.

"Inflation's going to pick up in 2013 over what we have seen in 2012. So we are looking ahead at a year of above normal food price inflation," says economist Ricky Volpe of USDA's Economic Research Service.



Volpe says to expect food price inflation of 3% to 4% in 2013. He says the drought affecting two-thirds of the nation is partly to blame.

"The major impact of the drought in the Midwest, higher corn prices leads to higher feed prices, leads to higher animal prices, and higher prices for all animal products," Volpe says.

He adds that consumers will see especially higher prices for beef.

"We are still faced with historically low inventory for cattle in the U.S.," Volpe says. "So we still have supply that's low relative to demand. We have strong inflation; that's not going anywhere, and the drought is only exacerbating that."

Egg and dairy prices will also be higher as drought drives up feed costs.

"So we have these higher feed prices translating into higher milk prices, which especially in the coming months and the first quarter of 2013 we expect to see this translate into a hike in overall dairy prices," Volpe says. "As the impacts of higher corn prices and higher feed prices translate throughout much of the year, we’re looking at egg prices to go up another 3% to 4% in 2013."

Fresh produce prices, which stayed low in 2012, are also expected to rise in 2013.
 

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