Price impacts of 2012 drought expected to be larger in 2013 for most foods
Overall food prices remain on track to increase by 2.5 to 3.5 percent in 2012, but are forecast to increase 3 to 4 percent in 2013. Food price inflation in 2013 is expected to be higher than normal due to the ongoing drought in the Midwest. The drought has driven up commodity prices, particularly field corn, used as animal feed and a food ingredient. Higher feed costs are expected to push up retail prices for beef, pork, dairy products, and eggs in 2013. ERS expects poultry prices to increase more in 2012 than in 2013, as feed costs impact prices for smaller animals faster. Price inflation for packaged and processed foods (other foods) is forecast to be in the 3.5 to 4.5 percent range for 2013, as higher corn prices are transmitted over the coming year into higher prices for corn flour and corn syrup--common ingredients in processed foods. More expensive high fructose corn syrup is expected to boost non-alcoholic beverage prices in 2013 as well. More information on food price changes and forecasts can be found in the Food Price Outlook data product on the ERS website, updated July 25, 2012.
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