Supermarket milk prices during April posted the largest increase in three years and beef and pork both jumped more than 10 percent for the second consecutive month, fueling a broader food inflation trend that’s pushed Americans’ grocery bills higher this year.
Average retail milk prices rose 10.9 percent nationwide last month compared with April 2010, according to the U.S. Bureau of Labor Statistics’ monthly Consumer Price Index report May 13. That was the largest year-over-year increase for any month since milk rose 13.5 percent in April 2008.
Beef and pork continued to lead meat prices up, though the surge slowed in April from March, when prices posted the biggest year-over-year advance since 2004. Pricier meat and milk are playing large roles in what’s forecast to be the biggest annual increase in food prices since 2008.
Escalating meat prices have roots in the 2008-09 recession, which, combined with a spike in feed costs, prompted U.S. beef and pork producers to cut herds as losses swelled. As the economy improved and exports boomed, meatpackers have bid more aggressively for smaller supplies of slaughter-ready animals, pushing cattle and hog prices to record highs this spring.
In the U.S. dairy business, milk production is on track for a record year, but American consumers are facing stepped-up competition from China and other top global importers of dairy products. A weak dollar is also contributing to rising export demand, dairy analysts said.
“International demand for dairy products has been one of the main reasons” for rising milk prices, said Dave Kurzawski, a dairy broker with Downes-O’Neill/FCStone in Chicago. “It’s been a demand-driven situation.”
During the first three months of this year, U.S. shipments of butter, cheese and other products to foreign buyers totaled nearly $1.1 billion, up 48 percent from the same period in 2010, according to the U.S. Dairy Export Council.
Fresh, whole milk at retail averaged $3.60 a gallon nationwide in April, up 10 cents from March and the highest price for any month since $3.68 in December 2008, according to Bureau of Labor Statistics data. Grade AA butter averaged $3.72 a pound, up 31 percent from a year earlier and the highest for any month, not accounting for inflation, since July 2004.
The rapid upswing in meat prices outpaced gains in most other foods and comes with unemployment at 9 percent and gasoline at the pump near or above $4 a gallon in much of the country. That’s stirred concern among beef and pork producers, who fear consumers will “trade down” from pricier steaks and chops to cheaper chicken.