The USDA said that higher food commodity and energy prices were behind the expected rise in prices, and the impact is likely to be even greater for meat and dairy prices, which were hit by higher feed costs in 2010.
However, it is important to note that the United States is only just emerging from a period of exceptionally low food prices, with the consumer price index having only recently returned to positive growth. The food consumer price index saw six consecutive months of annual declines in food prices from September 2009 to February 2010 – a first since 1959, according to the USDA.
“Although food price inflation was relatively weak for most of 2009 and 2010, higher food commodity and energy prices have recently exerted pressure on wholesale and retail food prices,” the agency said. “Hence, higher prices are projected to push inflation toward the historical average inflation rate of 2 to 3 percent in 2011.”
Several major food manufacturers announced their intention to raise prices on the back of stronger commodity costs toward the end of last year, expected to impact this year’s Consumer Price Index.
For all food, the Consumer Price Index increased 0.8 percent between 2009 and 2010, the lowest food inflation rate since 1962, the agency said, and food prices for foods consumed at home increased by 0.3 percent, the lowest annual increase since 1967.
Cereal and bakery prices fell 0.8 percent during 2010, fresh fruit prices were down 0.6 percent, carbonated drink prices fell 1.5 percent, and juices fell by 2.2 percent. Meanwhile, beef prices actually declined in December but were 6.1 percent up on the previous year, pork prices were 11.2 percent above the previous December’s level, and dairy prices rose 3.7 percent in the same period.