Consumers face largest increase in food costs in 18 years

WASHINGTON – High meat and produce prices are part of the largest increase in food costs that U.S. consumers have had to face in nearly two decades, the U.S Department of Agriculture (USDA) said Friday.
The USDA announced food costs will increase by 5 to 6 percent this year, the largest annual increase since 1990. It is above the USDA’s projected USDA of 4.5 to 5.5 percent.

Prices are expected to further increase by 4 to 5 percent in 2009, led by red meat and poultry, Reuters reports. If that projection occurs, it would mark the third straight year that food costs increased by at least 4 percent.

“It’s a little bit of a surprise how strong some of the numbers were in July,” said Ephrain Leibtag, the USDA economist who prepared the forecast. “We’ve been waiting for some moderation, but especially with some of the meat prices and how much has come through recently (at the retail level) leads me to believe the overall number may be a little bit higher for the year.”

The USDA reports that meat, poultry and fish make up 12 percent of total food spending, and the costs of those products are forecast to rise by 3 percent. Other food items forecast to rise are fruits and vegetables (5.5 percent), cereals and bakery products (9.5 percent), eggs (14 percent) and fats and oils (13.5 percent).

Concerns of flooding in the Midwest led to record highs for commodities such as corn and soybeans, though those prices have dropped as crops recovered. The cost of energy has also led to an increase in food prices, the USDA says.

Source: Reuters

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Former Editor In Chief, Independent Processor, and Former Editor, National Provisioner.

Sam Gazdziak has been writing for trade publications since 1997 and joined The National Provisioner in 2004. He helped launch Independent Processor magazine in 2008 as its editor-in-chief.