The USDA said in its monthly report on Wednesday that it expects food prices to rise 0.5 to 1.5 percent this year – the lowest level increase since 1992, when food price inflation was 1.2 percent. The forecast revises downward its July prediction that prices would rise 1.5 to 2.5 percent.
“Although global economies have recovered somewhat from the 2008-09 recession, world economic activity remains below pre-recession levels, resulting in overall food price inflation in 2010 remaining below historical averages,” the agency said.
Commodities prices have surged in recent months, prompting concern that there could be a repeat of the price spikes of 2008, which led to food shortages and riots in many parts of the world.
Flour prices down
Wheat in particular saw prices reach a two-year high this month, after crops were hit by drought in Russia, leading the country to impose a ban on exports. However, in July flour prices were down 5.4 percent compared to the previous year, USDA said.
Its Consumer Price Index (CPI) figures show that food-at-home prices increased by just 0.5 percent from 2008 to 2009 – the lowest increase since 1967 – with dairy prices dropping 6.4 percent and fresh produce prices down 4.6 percent.
Meat prices up
Meat prices, on the other hand, have soared following weak demand during 2009 due to the recession. Pork prices increased 1.2 percent in July and are up six percent on July 2009 levels, while beef and poultry prices are up 6.7 percent and one percent respectively since last July.
“As the overall economy began to recover from the recession, beef and pork commodity prices rose, and retail meat prices are now higher than in 2009,” USDA said. “Increased inflation for most meat products in 2010 is a strong possibility.”
The agency has forecast pork prices to increase three to four percent in 2010.