Economic Optimism Pushes Up Food Prices
In 2010, about a 1% increase was seen in food prices, according to USDA. For 2011, a 2 to 3% increase is expected.
In a USDA report, Ephraim Leibtag, an economist with USDA's Economic Research Service, says the expected increase is consistent with the historical norm.
“The reason why we are moving in that upward direction in addition to optimism about a recovering economy is these underlying commodities such as wheat, soybeans and corn, milk and meat products.”
Leibtag says increasing food prices are not only a good sign for the economy, but also tend to help employment.
“For consumers, if their employment prospects are improving, if job prospects are improving, if job prospects are getting better, the economy’s improving, then paying one or two percent more for food is a necessary outgrowth of that growing economy,” he says. “On the other side producers are better off if there is a little bit more leeway to be able to pass on higher costs, so that’s what we kind of see for the upcoming year.”
The largest price increases are expected for pork and dairy products next year. See a full listing of the expected price increases.
A Recap of 2010
Weak commodity prices contributed to the stable food prices in 2010, Leibtag says. “With recession at the end of ’08 and into 2009, and unfortunately into 2010 as well, we’ve had much weaker commodity prices until this summer. So the ingredient costs that go into food have been either stable or falling.”
Leibtag says pork and beef have increased in price for the last three or four months and now year over year they’re both up over 5%.
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