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