Pricey Meat to Boost Food Prices 4-5 Pct. in 2009

Thursday, July 24, 2008 8:22 AM



Food prices are estimated to rise by 5 percent this year, the largest annual increase since 1990. They rose by 4 percent in 2007, after years of trailing the overall inflation rate.

WASHINGTON -- Higher beef, pork and chicken prices, the feedyard consequence of sky-high grain prices, will fuel an increase of 4 to 5 percent in U.S. food prices in 2009, the third year in a row of hefty increases, the government forecast Wednesday.

Food prices are estimated to rise by 5 percent this year, the largest annual increase since 1990. They rose by 4 percent in 2007, after years of trailing the overall inflation rate.

The Agriculture Department says "retailers continue to pass on higher commodity and energy costs to consumers in the form of higher retail prices."

In its first estimate for 2009, the Agriculture Department said food prices would rise by 4 to 5 percent for the year, led by red meat and poultry, which account for 10 percent of food spending. Beef prices will rise by 6.5 percent, it estimated, and pork and poultry by 5.5 percent.

Livestock producers are expected to limit meat production, resulting in higher consumer prices, in the face of corn, wheat and soybean prices that have more than doubled since 2005. Per-capita meat consumption would drop by 4.6 lbs, or 2 percent, to 215.8 lbs (98 kg) in 2009.

For this year, the biggest price increase are forecast for eggs, up 14 percent, cereals and bakery products, up 9.5 percent, and fats and oils, up 12 percent.

In that group, cereals and bakery products are the largest component of the food basket, 7.4 percent of overall spending. All would moderate in 2009, rising at 4 percent or less.

Americans spend more than $1 trillion a year on groceries, snacks, carry-out food and meals in restaurants. Farmers get 20 cents of the food dollar, which dilutes the impact of record-high crop prices. The rest goes to processing, labor, transportation and distribution.

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