This year, food prices could surpass those of the 2008 food price crisis, as higher commodity and energy costs are pushing food makers to pass on the costs, according to the U.S. Department of Agriculture (USDA).
The continued unrest in the Middle East and northern Africa are possible factors for increasing global oil prices, and this is having a potential impact on the cost of food in the United States, says market research organization The Nielsen Co., New York.
The U.S. Department of Agriculture (USDA) agrees, as it reports that it predicted late last year that food prices would rise during 2011, and in recent weeks, several major food manufacturers have said they intend to raise prices on the back of stronger commodity costs. The USDA has been saying since July that after dropping to its lowest rate in 18 years, food price inflation would accelerate during 2011 by 2-3%. But it’s only in the last week that the agency revised its forecast, saying that it predicts the Consumer Price Index (CPI) to rise by 3-4% during the year.
Reports indicate that over the past two years, CPI inflation for all food that is eaten at home as well as in restaurants fell to its lowest level since 1962, the USDA said, rising only 0.8% during the period.
“Although food price inflation was relatively weak for most of 2009 and 2010, higher food commodity and energy prices have recently exerted pressure on wholesale and retail food prices,” the USDA states. “These cost pressures, along with strengthening global food demand, have pushed inflation projections upward for 2011.”
Yet Nielsen points out that food accounts for a much smaller proportion of household spending in the United States than it does elsewhere. In the Unites States, food represents 6.9% of average household expenditure, compared to more than 11% for the average Austrian household, 15% in South Korea and 45% in Pakistan. Per capita, that translates as $2,208 in the United States, $2,860 in Austria but just $309 in Pakistan, the market researcher says.
USDA Says Food Prices Could Surpass 2008 Levels
March 15, 2011