USDA Expects Food Prices to Rise

Scott Kilman
The Wall Street Journal

Putting food on the table is about to become more expensive.

Food prices, which rose in 2010 by the mildest rate since 1962, will jump between 3% and 4% this year, according to a forecast released Thursday by the U.S. Agriculture Department at its annual outlook conference in Washington.

Rising grain, livestock and energy costs are pressuring food manufacturers, restaurants and supermarkets to pass along higher costs even though postrecession consumers are leery about paying more.

The USDA raised its 2011 food-inflation forecast Thursday from its previous 2011 forecast for a 2% to 3% rise in the government’s consumer price index for all food. The all-food CPI rose just 0.8% in 2010.

A combination of strong foreign demand for U.S. commodities, plus tight U.S. supplies, have pushed prices of many food categories higher in recent months.

The USDA said retail prices of ground beef and steak in January were higher by 9.9% and 9.8%, respectively, than a year earlier. Retail pork prices, meanwhile, were 9.9% higher.

The USDA said it expects retail prices of cereal and bakery products to climb between 3.5% and 4.5% in 2011, compared with 2010.

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