Higher beef, pork and chicken prices, the feedyard consequence of sky-high grain prices, will fuel an increase of 4 to 5 per cent in US food prices in 2009, the third year in a row of hefty increases, the government forecast.

   

Food prices are estimated to rise by 5 per cent this year, the largest annual increase since 1990. They rose by 4 per cent in 2007, after years of trailing the overall inflation rate.   

The Agriculture Department said, ’Retailers continue to pass on higher commodity and energy costs to consumers in the form of higher retail prices.’    

In its first estimate for 2009, the Agriculture Department said food prices would rise by 4 to 5 per cent for the year, led by red meat and poultry, which account for 10 per cent of food spending. Beef prices will rise by 6.5 per cent, it estimated, and pork and poultry by 5.5 percent.

Livestock producers are expected to limit meat production, resulting in higher consumer prices, in the face of corn, wheat and soybean prices that have more than doubled since 2005.

Per-capita meat consumption would drop by 4.6 lbs, or 2 per cent, to 215.8 lbs (98 kg) in 2009.

For this year, the biggest price increases are forecast for eggs, up 14 per cent, cereals and bakery products, up 9.5 percent, and fats and oils, up 12 per cent.

In that group, cereals and bakery products are the largest component of the food basket, 7.4 per cent of overall spending. All would moderate in 2009, rising at 4 per cent or less.

Americans spend more than $1 trillion a year on groceries, snacks, carry-out food and meals in restaurants.

Farmers get 20 cents of the food dollar, which dilutes the impact of record-high crop prices. The rest goes to processing, labour, transportation and distribution.- Reuters