NEW YORK – Prices for oil and other commodities are going down, but analysts say that won’t have an effect on food prices.
That’s reportedly because retail prices are behind commodities prices by months or longer. Some items may come down a bit as commodities cool down, but others may not change at all.
"Food prices tend to go up pretty quickly and they tend to stick on the way down," said Jim Sartwelle, an economist with the American Farm Bureau
U.S. retail food prices have jumped on average 6 percent this year triple the normal inflation rate of around 2 percent as soaring demand for grains coupled with severe weather around the globe battered crops and sent world prices for rice, flour and other staples soaring.
Food manufacturers have dealt with the higher input costs in a variety of ways, from raising retail prices to shrinking boxes of cereal and bags of potato chips so they can sell less product for the same price.
"As long as we're in this world of expensive oil and commodities, the prices that you're seeing now in the grocery shelves are not going away," said Ephraim Leibtag, an economist with the U.S. Department of Agriculture (USDA).
Looking ahead to next year, economists see a mixed bag for American consumers. While falling grain prices should slow the rate of increases for baked goods, the USDA's Leibtag says people can expect to pay more for other items like beef, pork and chicken.
The cost of grains for feed shot up as commodities rose. Now, livestock owners who spend half or more of their production costs on feeding their animals have had to thin the size of their herds and flocks to deal with the increases. Cow slaughter has jumped 22 percent over last year, while hog slaughter is up 10 percent.
Much of that meat has gone into freezers to handle excess supply, but as the inventory dwindles, livestock owners won't have the money to replenish their herds to meet demand.
"That's going to have some serious consequence at the retail level," said Jesse Sevcik, vice president of legislative affairs at the American Meat Institute. "The only thing left is for prices to go up."
Source: Associated Press