What's Up With Food Prices
What’s Up With Food Prices. I’m Greg Martin with today’s Line On Agriculture.
I have this love/hate relationship with my local grocer. It’s kind of like the old Forest Gump aphorism...life is like a box of chocolates...you just never know what you are going to get. Ephraim Leibtag, USDA economist says that even though it is still very early to be seeing any hard figures, there are some indications as to what will happen with 2012 food prices.
LEIBTAG: The key factors right now in terms of the factors for 2012 have to do with how the underlying costs including commodities for food and energy are going to behave and how consumers are going to deal with the continuing challenges of an economy that isn’t quite on its feet yet. We’re officially out of recession but in a lot of ways unemployment is still high, consumers are still very budget conscious and so retailers, both grocery and restaurant are facing the challenge of the higher costs along with some diminished demand for their products. That combination leaves a lot of uncertainty for 2012 and we haven’t even talked about weather yet which of course is the one that can really swing things.
Inflation is still a key factor in this equation.
LEIBTAG: For 2011 we’ve seen higher than normal inflation in contrast to 2009/2010 where we were very low. We’re in the 3 to 4% range right now for food overall. Grocery store prices given what’s happened to commodity prices over the past year are steadily higher than that so our forecast remains at 3 1/2 to 4 1/2% for grocery stores.
Again it is still very early in this game but Leibtag says there does seem to be some better news in some areas.
LEIBTAG: And the real question for 2012 is whether our higher inflation rates from 2011 will continue or whether they will soften a little. But right now we are producing a slight softening. In 2012 we’re predicting food prices to rise 2 1/2 to 3/12% which would be above the normal average. Not quite as high though as 2011.
Leibtag says there are many uncertainties to consider when looking at the prospects for food prices next year.
LEIBTAG: Beef and pork prices are both rising around 7% predicted for 2011. Same thing for fats and oils and both of those are impacted by the much higher corn and soybean prices we’ve seen over the last year. The only items that are showing a little bit of weakness are fresh fruit which are a 2 to 3% and processed fruits and vegetables are at 1 1/2 to 2 1/2%
That’s today’s Line On Agriculture. I’m Greg Martin on the Ag Information Network.