USDA: Food Prices Will Rise 3 to 4% Next Year

According to the U.S. Dept. of Agriculture the record drought that half the country suffered through will eventually push food prices up by 3 to 4 percent next year.

Milk, eggs, beef, poultry and pork prices will all be affected due to higher prices for feed. Beef prices are expected to see the biggest jump at 4 percent to 5 percent. Dairy product prices 3.5 percent to 4.5 percent; poultry and egg prices are projected to rise 3 percent to 4 percent; and pork prices are expected to rise 2.5 percent to 3.5 percent in 2013.

“In 2013 as a result of this drought we are looking at above-normal food price inflation. … Consumers are certainly going to feel it,” USDA economist Richard Volpe said.

Normal grocery price inflation is about 2.8 percent.

Volpe said the drought is not expected to affect prices for fruits and vegetables. Most of those crops are irrigated.

“This drought was a surprise for everybody,” he added. “The USDA was forecasting a record year for the corn crop until this drought materialized. Now we’re not going to get that.”

Poultry prices will be the first to rise because of the drought because chickens and turkeys need only a few months to grow to market size, he said. Meat and poultry prices are the most affected because feed prices represent the biggest part of their cost of production. Processed food prices are less affected by changes in commodity prices because ingredients typically make up just a fraction of their production costs.

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